Refer to the Above Graph

question 92

Multiple Choice

Refer to the above graph. An increase in price, other factors constant, would cause a change from

• A) point 5 to point 1.
• B) point 4 to point 5.
• C) point 1 to point 6.
• D) point 3 to point 4.

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Definitions:

Variable Overhead

Costs that vary proportionally with the level of production or sales, such as utilities or commissions.

Fixed Overhead

The portion of overhead costs that remains constant regardless of the level of production or business activity.

Direct Labor

Labor costs that can be identified with a specific product or service.