Working in the Finance Department of a Firm That Operates

question 173

Multiple Choice

Working in the finance department of a firm that operates a chain of dry cleaning and tailoring shops,Demonte discovered that tax management is:

• A)not an area of concern for his department,since the accounting department prepares the tax returns.
• B)an activity of his department,but not a major concern because software now available automates the handling of taxes.
• C)an area of major concern.
• D)handled by his department,but is not a major concern because businesses that provide services are exempt from most taxes.

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Definitions:

Direct Materials

Raw materials that can be directly traced to the manufacturing of a product and are a part of the final product.

Variable Costs

Variable costs are expenses that change in proportion to the activity of a business, such as costs for raw materials or production.

Cost-volume-profit Analysis

A financial accounting technique that calculates how variations in costs and sales volume impact a firm's profitability.

Fixed Costs

Fixed costs are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.