A Sudden Increase in the U.S. Price Level

question 51

Multiple Choice

A sudden increase in the U.S. price level

• A) makes creditors in dollars better off.
• B) makes creditors in dollars worse off.
• C) does not affect creditors in dollars.
• D) makes creditors in DM worse off.
• E) makes lenders worse off.

---

Definitions:

Variable Costing

A financial recording method that counts only the variable expenses related to production (direct materials, direct labor, and variable manufacturing overhead) in the pricing of products.

Variable Costing

A financial recording approach that incorporates only variable manufacturing expenses, such as raw materials, direct workforce, and fluctuating production overheads, into the costs of goods produced.

Net Operating Income

A financial term representing the profit made from a company’s operations, after subtracting operating expenses from operating income.

Absorption Costing

The product cost determination method under this accounting strategy includes the expenses for direct materials, direct labor, and all manufacturing overhead, whether it is variable or fixed.