Use the Figure Below to Answer the Following Question(s)

question 272

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 6-2

Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. In which case is the incentive of producers and consumers to economize the strongest?

• A) A
• B) B
• C) C
• D) D

---

Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a profit or loss.

Variable Costing

An accounting method that considers only variable costs as product costs and treats fixed costs as period costs that are expensed in the period incurred.

Income Statement

An income statement is a financial document that summarizes an organization's revenue, expenses, and profit or loss over a specific period.