Which of the Following Situations Would Be Most Likely to Violate

question 32

Multiple Choice

Which of the following situations would be most likely to violate cost-volume-profit assumptions about fixed costs?

• A) When production volume increases beyond the capacity of the plant, a second shift will be added instead of building a new plant.
• B) As volume decreases, per-unit fixed manufacturing overhead remains constant.
• C) The company's raw material supplier typically allows volume discounts when larger amounts of the raw material are purchased.
• D) Fixed costs per unit decrease as volume increases.

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Definitions:

Repeating Decimal

A decimal number in which a sequence of digits is repeated indefinitely.

Decimal Notation

A system of numbers expressed in base 10, involving a decimal point to separate whole numbers from fractional parts.

Percent Equivalent

A value expressed as a percentage that represents a portion of a whole.

Repeating Decimal

A decimal number in which a sequence of digits repeats indefinitely.