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:

Return on Investment

The ratio of net profit to cost of investment, indicating the efficiency of an investment in generating profit.

Responsibility Level

The scope of authority and accountability designated to individuals or departments within an organization, often related to budgeting and costs.

Controllable Costs

Costs that can be influenced or changed by management decisions in the short term.

Master Budget

A comprehensive financial planning document that consolidates all of a company’s individual budgets, including sales, production, and expenses, for a specific period.