A Look at the Historical Data Indicates That Velocity for M₁

question 68

Multiple Choice

A look at the historical data indicates that velocity for M₁

• A) has been more variable than the velocity for M2, but both have been fairly constant for the past 65 years.
• B) and M2 have both trended downward, but velocity for M2 has been more erratic than velocity for M₁1.
• C) has been fairly constant for the past 65 years, but velocity for M2 has trended downward.
• D) has trended upward in the past 65 years, but velocity for M2 has been more constant.

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Definitions:

Absorption Costing

A method of product costing that incorporates all manufacturing costs, including both fixed and variable costs, in the price of a product.

Variable Costing

An accounting method that charges only variable costs to cost of goods sold and reports fixed costs separately as period costs.

Fixed Manufacturing Overhead

Costs associated with production that do not vary with the level of output, such as salaries of managers and rent for factory buildings.

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 product.