When 24,000 Units Are Produced, Variable Costs Are $12

question 222

Multiple Choice

When 24,000 units are produced, variable costs are $12.00 per unit. Therefore, when 18,000 units are produced ________.

• A) variable costs will remain at $12.00 per unit
• B) variable costs will total $288,000
• C) variable unit costs will increase to $16.00 per unit
• D) variable unit costs will decrease to $9.00 per unit

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Definitions:

Escalator Clause

is a contract provision that allows for an automatic adjustment in prices or wages based on fluctuations in certain economic indicators.

Costs Change

Alterations in the financial expenditures associated with producing or obtaining goods and services.

Indirect Costs

Costs that are not directly accountable to a cost object, such as overhead and administrative expenses.

Production Plant

A facility where goods are manufactured or assembled, using labor and machinery.