The Following Diagram Shows Two Budget Lines: a and B

question 96

Multiple Choice

The following diagram shows two budget lines: A and B.
Which of the following could explain the change in the budget line from A to B?

• A)A decrease in income and a decrease in the price of x.
• B)A decrease in income and an increase in the price of x.
• C)An increase in income and a decrease in the price of x.
• D)An increase in income and an increase in the price of x.

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Definitions:

Indirect Material

Items used in the production process that do not become a part of the final product, such as lubricants for machines.

Direct Materials

Raw materials that are directly traceable to the production of a specific product and are a significant component of manufacturing expenses.

Nonmanufacturing Cost

Expenses that are not directly associated with the production of goods, including selling, general, and administrative expenses.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period they are incurred.