Use the Figure Below to Answer the Following Questions

question 157

Multiple Choice

Use the figure below to answer the following questions.

Figure 3.4.2
-At a price of $10 a unit in Figure 3.4.2,

• A)there is a surplus of 200 units.
• B)there is a shortage of 200 units.
• C)there is a surplus of 400 units.
• D)there is a shortage of 400 units.
• E)quantity will rise.

---

Definitions:

Variable Costing

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

Direct Materials

Materials that can be directly linked to the production of a product and are essential components of the final product.

Fixed Costs

Charges that do not fluctuate with production or sales volume, such as property leases, payroll, and insurance policies.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a specific period.