Arturo Company's Model a Generator Sells for $456 and Model

question 30

True/False

Arturo Company's Model A generator sells for $456 and Model B sells for $390.The variable cost of Model A is $404 and of Model B is $320.The company will generate lower revenues but a higher net income if it sells more of Model B than Model A.

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Definitions:

Indirect Materials

Materials used in the production process that do not directly become part of the finished product.

Manufacturing

The procedure of changing basic materials, components, or elements into end products that align with a customer’s needs or criteria.

Direct Materials

Raw materials that can be directly traced to the manufacturing process of a product and are a significant part of its cost.

Secondary Materials

Materials used in the production process that are not the primary raw materials.