If Production Volume Increases from 15,000 Units to 21,000 Units

question 4

Multiple Choice

If production volume increases from 15,000 units to 21,000 units, _____.

• A) average costs will increase by 30%
• B) total fixed costs will increase by 25%
• C) total variable costs will increase by 40%
• D) mixed and variable costs will increase by 55%

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Definitions:

Make or Buy

A decision-making process in which a company chooses between manufacturing a product internally or purchasing it from an external supplier.

Significant Sunk Costs

Expenses that have already been incurred and cannot be recovered or changed.

Avoidable Cost

Costs that can be eliminated if a certain decision is made, not incurred if a particular activity is avoided.

Sunk Cost

A sunk cost is an expense that has already been incurred and cannot be recovered, often considered irrelevant for future business decisions.