Cindy's Nails Operates in the Perfectly Competitive Pedicure Industry

question 187

True/False

Cindy's Nails operates in the perfectly competitive pedicure industry.The city is considering requiring nail salons to be certified by a health inspector.The certification will cost $1,000 annually and is thus a fixed cost.The certification will affect Cindy's decision to operate, not the number of pedicures she chooses to perform if she operates.

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Definitions:

Direct Materials

The raw materials directly used in the production of a product, easily traceable to the finished good.

Absorption Costing

An accounting method that includes both variable and fixed manufacturing costs in the cost of a product.

Production Costs

Expenses directly and indirectly involved in creating a product, including materials, labor, and overhead costs.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a unit of product.