IIA Exam IIA-CIA-Part3-3P Topic 7 Question 60 Discussion

Actual exam question for IIA's IIA-CIA-Part3-3P exam

Question #: 60
Topic #: 7

A bicycle manufacturer incurs a combination of fixed and variable costs with the production of each bicycle Which of the following statements true recording these costs?

AIf the number of bicycles produced is increased by 15 percent, the variable cost per unit will increase proportionally

BThe fixed cost per unit will vary directly based on the number of bicycles produced during the
production cycle

CThe total variable cost will vary proportionally and inversely with the number of bicycles produced during a production run

DIf the number of bicycles produced is increased by 30 percent the fixed cost per unit will decline

Show Suggested Answer

Suggested Answer: A

by Ilona at Dec 07, 2024, 12:59 AM

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Gayla

7 days ago

Option D is definitely wrong. Fixed costs don't decrease just because you produce more units. That's not how fixed costs work.

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Jani

14 days ago

I'm not sure about option C. Doesn't the total variable cost usually increase with the number of units produced, not vary inversely?

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Caitlin

17 days ago

Option A seems correct. As the number of bicycles produced increases, the variable cost per unit should also increase proportionally.

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Earleen

20 days ago

But if the number of bicycles produced increases, wouldn't the total variable cost also increase proportionally?

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Youlanda

22 days ago

I disagree, I believe the answer is A.

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Earleen

24 days ago

I think the answer is C.

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