When 20,000 Units Are Produced, Fixed Costs Are $16 Per

question 127

Multiple Choice

When 20,000 units are produced, fixed costs are $16 per unit. Therefore, when 40,000 units are produced fixed costs will:

• A)increase to $32 per unit
• B)remain at $16 per unit
• C)decrease to $8 per unit
• D)total $640,000

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Definitions:

Closing the Books

Closing the books is an accounting process involving updating ledger accounts at the end of an accounting period to prepare financial statements.

Fiscal Year

A twelve-month period used for accounting purposes to prepare financial statements, which may or may not align with the calendar year.

Calendar Year

A one-year period that begins on January 1 and ends on December 31, used for most financial and tax reporting purposes.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically including a balance sheet, income statement, and cash flow statement.