Based on the Following Cost Data, What Conclusions Can You

question 29

Multiple Choice

Based on the following cost data, what conclusions can you make about the costs of Product A and Product B? $\begin{array}{|l|r|c|}\hline &{\text { Total Cost }} \\\hline \text { Production: } & \text { Product A } & \text { Product B } \\\hline 10 \text { units } & \$ 100 & ? \\\hline 100 \text { units } & \$ 1,000 & ? \\\hline 1,000 \text { units } & \$ 10,000 & ? \\\hline&\text { Unit Cost }\\\hline \text { Production: } & \text { Product A } & \text { Product B } \\\hline 10 \text { units } & ? & \$ 10,000 \\\hline 100 \text { units } & ? & \$ 1,000 \\\hline 1,000 \text { units } & ? & \$ 100 \\\hline\end{array}$

• A)The cost of Product A is a fixed cost and the cost of Product B is a variable cost.
• B)The cost of Product A is a variable cost and the cost of Product B is a fixed cost.
• C)The costs of Product A and Product B are both variable costs.
• D)The costs of Product A and Product B are both mixed costs.

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Definitions:

Available-for-Sale Securities

Financial instruments that are purchased with the intent to sell before they reach maturity and are classified as neither held for trading nor held to maturity.

Accrued Interest

The interest that has accumulated on a bond, loan, or other financial instrument since the last interest payment was made.

Bonds

Fixed-income investments that represent loans made by an investor to a borrower, typically corporate or governmental.

Available-for-Sale

A classification of securities that a company holds, which can be sold in the future, not classified as held-to-maturity or trading securities.