An Example of a Cost That Is Variable with Respect

question 84

Multiple Choice

An example of a cost that is variable with respect to the number of units produced and sold is:

• A) insurance on the headquarters building.
• B) power to run production equipment.
• C) supervisory salaries.
• D) depreciation of factory facilities.

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Definitions:

Profit Maximization

The procedure through which a business identifies the pricing and production volume that yields the highest earnings.

Market Price

The price at which a good or service is offered in the marketplace.

Profit Maximization

A rephrased definition: The strategy or aim of a firm to achieve the highest profit possible, usually by adjusting outputs, prices, or production costs.

Market Price

The current price at which an asset or service can be bought or sold in the open market.