a.Indicate the effect of a purchase of merchandise on account (on credit)on each of the following items.Use "Increase," "Decrease," or "No effect" to express your answer for each,and place your answers in the spaces provided.Assume that the first two ratios exceeded 1.0 before the transaction.
b.Indicate the effect of a payment of an account payable on each of the following items.Assume that the first two ratios exceeded 1.0 before the transaction.Use "Increase," "Decrease," or "No effect" to express your answer for each,and place your answers in the spaces provided.
Definitions:
Average Total Cost
The total cost of producing a specific quantity of a good or service divided by the quantity produced, representing the per-unit cost of production.
Marginal Cost
The extra expense incurred from the production of an additional unit of a product or service.
TVC
Total Variable Costs; the sum of all costs that vary with the level of production, such as materials and labor directly involved in creating a product.
Total Fixed Cost
The sum of all costs that remain constant regardless of the level of production or output in the short term.
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