Figure 7-C -Refer to Figure 7-C.If the Market Price Increased to $5

question 43

Multiple Choice

Figure 7-C
-Refer to Figure 7-C.If the market price increased to $5 in Graph B, this firm should:

• A)immediately shut down.
• B)increase output.
• C)decrease output.
• D)continue producing the same level of output.

---

Definitions:

Actual Cost

Actual cost is the true amount of money spent on producing a product, completing a project, or conducting an activity, including all direct and indirect expenses.

Direct Labor Rate Variance

The difference between the actual rate and the standard rate paid for direct labor multiplied by the actual direct labor hours used in producing a product.

Direct Labor

The wages paid to workers who are directly involved in the production of goods or services.

Direct Labor Rate Variance

The difference between the expected cost of direct labor per unit of production and the actual cost incurred.