A Factory Is Operating at Less Than 100% Capacity

question 155

Multiple Choice

A factory is operating at less than 100% capacity. Potential additional business will not use up the remainder of the plant capacity. Given the following list of costs, which one should be ignored in a decision to produce additional units of product?

• A) Variable selling expenses
• B) Fixed factory overhead
• C) Direct labor
• D) Contribution margin of additional units

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Definitions:

Bronchi

The main passageways directly attached to the lungs that allow air to enter and exit the respiratory system.

Alveoli

Small air pockets in the lungs where oxygen and carbon dioxide are exchanged.

Epithelium

A layer of cells covering the body surfaces, lining cavities, and forming glandular tissue.

Larynx

The hollow muscular organ forming an air passage to the lungs and holding the vocal cords; also known as the voice box.