Use the Following to Answer Questions

question 70

Multiple Choice

Use the following to answer questions:
Figure: Three Firms That Pollute
-(Figure: Three Firms that Pollute) Look at the figure Three Firms That Pollute. If each company is allowed to emit only 300 tons of pollution per day, which company will be most adversely affected?

• A) firm A
• B) firm B
• C) firm C
• D) They are equally affected.

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Definitions:

Period Costs

Expenses that are not directly associated with manufacturing and are charged as costs during the period they occur, including general, selling, and administrative costs.

Variable Cost

A cost that varies with the level of output or sales, such as materials and labor costs.

Fixed Manufacturing Cost

Costs that do not change with the level of manufacturing activity, such as rent for a factory building or salaries of permanent staff.

Manufacturing Overhead

All indirect costs associated with the production process, like utilities and salaries for support staff.