Which of the Following Is True of a Company That

question 375

Multiple Choice

Which of the following is true of a company that uses absorption costing?

• A) Net operating income fluctuates directly with changes in sales volume.
• B) Fixed production and fixed selling costs are considered to be product costs.
• C) Unit product costs can change as a result of changes in the number of units manufactured.
• D) Variable selling expenses are included in product costs.

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Definitions:

Supply Elasticity

Measures how the quantity supplied of a good responds to a change in the price of that good.

Market Supply Curve

A graphical representation of the quantity of goods and services that suppliers are willing and able to sell at various prices during a given period.

Complements

Goods or services that are used together, where the demand for one is increased when the price of the other decreases.