Imagine Purchasing a Cup of Coffee

question 25

Multiple Choice

Imagine purchasing a cup of coffee.Which of the following statements correctly classifies the direct,indirect,variable,and fixed costs associated with that purchase,assuming the cost object is the cup of coffee?

• A)The cost of the cup and the lid is an indirect cost because it can be readily traced to the cost object.
• B)The shop supervisor's salary is a direct cost because it cannot be readily and feasibly traced to the cost object.
• C)The volume of coffee beans purchased is a variable cost because it changes along with the changing volume of cups of coffee sold.
• D)The shop's monthly water bill is a fixed cost because it changes along with the changing volume of sales.

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Definitions:

Industrial Regulation

A set of government rules and guidelines aimed at controlling the activities, standards, and behaviors within specific industries to protect public interests.

Celler-Kefauver Act

A U.S. law passed in 1950 to amend the Clayton Act, aimed at preventing anticompetitive mergers and acquisitions by closing loopholes regarding asset purchases.

Interlocking Directorates

The practice of having the same individuals serve on the boards of directors of multiple companies, potentially influencing competitive practices.

Sherman Act

A landmark federal statute in the field of United States antitrust law passed in 1890 to preserve free and unfettered competition as the rule of trade.