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Which of the following is FALSE regarding the downward demand spiral? ANSWER It is not usually seen when practical capacity is used as a denominator

Which of the following is FALSE regarding the downward demand spiral?

ANSWER

It is not usually seen when practical capacity is used as a denominator level.

It is typically found when a company uses master-budget capacity utilization as a denominator level.

It results in progressively higher per unit variable costs being allocated to products.

It occurs when competitor prices are not met, causing a drop in demand, and in turn causing a higher per unit cost.

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