Which of the Following Statements Is True for a Company

question 49

Multiple Choice

Which of the following statements is true for a company that uses variable costing?

• A) The unit product cost changes as a result of changes in the number of units manufactured.
• B) Both variable selling costs and variable production costs are included in the unit product cost.
• C) Net operating income moves in the same direction as sales.
• D) Net operating income is greatest in periods when production is highest.

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Definitions:

Marginal Cost Curves

A graphical representation that shows how the cost of producing one more unit of a good or service varies as production increases.

Market Supply Curve

A graphical representation showing the total quantity of a good or service that suppliers are willing and able to sell at different prices.

Producer Surplus

The difference between the amount that producers are willing and able to sell a good for and the actual amount they receive in the market.

Economic Rent

Income derived from the possession of a unique resource, exceeding that which is needed to keep the resource in its current employment.