14. Which of the following situations will most likely violate cost-volume-profi

Question

14. Which of the following situations will most likely violate cost-volume-profit

            assumptions about fixed costs?

A)

When production volume increases beyond the capacity of the plant, a second shift will be added instead of building a new plant.

B)

The company’s raw material supplier typically allows volume discounts when larger amounts of the raw material are purchased.

C)

Fixed costs per unit decrease as volume increases.

D)

As volume increases, per unit fixed manufacturing overhead remain constant.

A)

When production volume increases beyond the capacity of the plant, a second shift will be added instead of building a new plant.

B)

The company’s raw material supplier typically allows volume discounts when larger amounts of the raw material are purchased.

C)

Fixed costs per unit decrease as volume increases.

D)

As volume increases, per unit fixed manufacturing overhead remain constant.

Explanation / Answer

d) As volume increase , per unit fixed maufacturing overhead remain constant

Explanation: fixed cost remains constant in total but per unit cost decreases with increase in output and increases per unit with decrease in volume

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.