Fixed Indirect Production Costs Affect the Calculation of ________ on the Absorption

question 133

Multiple Choice

Fixed indirect production costs affect the calculation of ________ on the absorption income statement.Fixed indirect production costs do NOT affect the calculation of ________ on the contribution income statement.

• A) contribution margin; gross margin
• B) gross margin; contribution margin
• C) operating income; gross margin
• D) contribution margin; operating income

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Definitions:

Price Elasticity of Demand

An indicator of the sensitivity of the demand for an item to adjustments in its pricing.

Perfectly Inelastic Demand

Product or resource demand in which price can be of any amount at a particular quantity of the product or resource that is demanded; when the quantity demanded does not respond to a change in price; graphs as a vertical demand curve.

Perfectly Elastic Demand

Product or resource demand in which quantity demanded can be of any amount at a particular product or resource price; graphs as a horizontal demand curve.

Graphed

A method of representing data visually using charts or plots to illustrate relationships between different variables.