If Fixed Cost Rises

question 61

Multiple Choice

If fixed cost rises,

• A)the profit-maximizing level of output would decrease.
• B)the profit-maximizing level of output would not change.
• C)marginal cost rises.
• D)variable cost falls.

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Definitions:

Goodwill Impairment

An accounting charge that occurs when the book value of goodwill exceeds its fair market value, indicating the assets are worth less than their currently recorded value.

Fair Value

An estimation of the market value of an asset or liability, reflecting the amount for which it could be exchanged or settled between knowledgeable, willing parties.

Reporting Unit

A component of an organization for which discrete financial information is available and is reviewed regularly by the operations’ segment manager.