A Review of Parrish Corporation's Accounting Records Found That at a Volume

question 67

Multiple Choice

A review of Parrish Corporation's accounting records found that at a volume of 90,000 units, the variable and fixed cost per unit amounted to $8 and $4, respectively. On the basis of this information, what amount of total cost would Parrish anticipate at a volume of 85,000 units?

• A) $1,020,000.
• B) $1,040,000.
• C) $1,060,000.
• D) $1,080,000.
• E) None of the other answers is correct.

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Definitions:

Efficiency Gains

Improvements in the use of resources that allow for more output without increasing the input.

Natural Monopoly

A market condition in which a single firm can provide a product or service at a lower cost than any potential competitors, often due to economies of scale.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of the operation increases.