Which of the Following Will Cause the Average Fixed Cost

question 114

Multiple Choice

Which of the following will cause the average fixed cost curve of making cigarettes to shift?

• A) a $5 million penalty charged to each cigarette maker
• B) a $1 per pack tax on cigarettes
• C) a $3 per hour wage increase
• D) An increase in the demand for cigarettes.

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Definitions:

LIFO Inventory Method

An inventory valuation method that assumes the last items placed in inventory are the first sold during an accounting period; stands for Last-In, First-Out.

Inventory Costing Methods

Techniques used to assign costs to inventory items, such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and weighted average cost.

Gross Profit

The difference between revenue from sales and the cost of goods sold, before accounting for selling, general, and administrative expenses.