Which of the Following Is True as Process Type Changes

question 6

Multiple Choice

Which of the following is true as process type changes from batch to continuous?

• A) Unit variable costs decrease, and initial fixed costs decrease.
• B) Initial fixed costs increase, while unit variable costs decrease.
• C) Unit variable costs increase, and initial fixed costs increase.
• D) Initial fixed costs decrease, while unit variable costs increase.

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Definitions:

Selling And Administrative Expenses

These are expenses that are not directly tied to the production of goods or services, including costs such as salaries of sales personnel and marketing expenses.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost of materials, based on budgeted prices.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain level of output, often used to measure workforce productivity.

Variable Overhead Efficiency Variance

A metric that measures the difference between the actual and budgeted variable overhead costs based on the efficiency of production.