How Will Unit (Average) Cost of Manufacturing (Materials, Labor and Overhead)

question 53

Multiple Choice

How will unit (average) cost of manufacturing (materials, labor and overhead) usually change if the production level rises?

• A)It will remain constant.
• B)It will increase in direct proportion to the production increase.
• C)It will increase, but inversely with the production increase.
• D)It will decrease inversely and in direct proportion to the production increases.
• E)It will decrease, but not in direct proportion to the production increase.

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Definitions:

Straight-Line Depreciation

A strategy for apportioning the cost of a concrete asset over its effective life in equal yearly installments.

Net Present Value

A financial metric that calculates the present value of all cash flows (both incoming and outgoing) expected from an investment, adjusted for time and interest.

After-Tax Net

The amount of money left after all applicable taxes have been deducted from gross income or profit.

Cash Inflow

The total amount of money being transferred into a business, project, or financial product during a specific period, often resulting from sales, financing, or investments.