Indicate Whether Each of the Following Statements Is True or False.(Assume

question 98

Short Answer

Indicate whether each of the following statements is true or false.(Assume a perpetual inventory system. )
_____ a)The freight terms FOB shipping point increase the cost of inventory to the buyer.
_____ b)The term FOB means that goods are shipped free of charge to buyer and seller.
_____ c)FOB shipping point means that purchaser's responsibility ends at shipping point.
_____ d)FOB destination means that seller's responsibility ends at destination.
_____ e)When the seller of merchandise records freight under the terms FOB shipping point,the seller records an expense.

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Definitions:

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced, showing the cost of each product unit excluding variable costs.

Average Variable Cost

The cost a company incurs for each unit of output, which changes with the level of production, excluding fixed costs.

ATC

Abbreviation for “Average Total Cost,” reflecting the total cost of production divided by the number of goods produced, in economic terms.

MC

Stands for Marginal Cost, which is the increase or decrease in the total cost that arises from producing one additional unit of a product.