Gary Objected to the High Cost of the Copier That

question 70

Multiple Choice

Gary objected to the high cost of the copier that Lynette was suggesting his office purchase.Lynette stated,"The initial price is one of the highest on the market,but this copier offers the fastest output rates available on the market and it has one of the best maintenance records in the industry.This will assist you in meeting those critical production deadlines you told me about." Lynette is using the _____ method to respond to Gary.

• A) direct acceptance
• B) pass-up
• C) referral
• D) revisit
• E) compensation

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Definitions:

Variable Costing

A cost accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs and treats fixed manufacturing overhead as a period expense.

Net Operating Income

The profit a company makes after deducting operating expenses but before interest and taxes from its total revenue.

Direct Labor Cost

The expense associated with employees who physically convert raw materials into the company's products; considered a variable cost.

Absorption Costing

A method of inventory costing that includes all manufacturing costs, both variable and fixed, in the cost of a product.