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:

Average Total Cost

Average total cost is the total cost of production divided by the number of units produced, encompassing both fixed and variable costs.

Per-Unit Profit

The profit earned on each unit of a product sold, calculated by subtracting the per-unit cost from the selling price per unit.

Monopolistically Competitive

Pertaining to a market structure where many firms sell products that are similar but not identical, leading to competition based on price, quality, and marketing.

Average Variable Cost

Average Variable Cost is the total variable costs (costs that vary with production levels) divided by the quantity of output produced.