Which of the Following Costs Require Similar Treatment to Property

question 75

Multiple Choice

Which of the following costs require similar treatment to Property Tax Expense in an interim financial report?1) Annual major repairs.2) Advertising expense.3) Bonus expense, if estimable.4) Quantity discounts based on annual sales.

• A) 1 and 2
• B) 1, 2, and 3
• C) 1, 2, and 4
• D) 2, 3, and 4
• E) 1, 2, 3, and 4

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Definitions:

Fixed Cost

Expenses that do not change with the level of production or sales over a certain period, such as rent or salaries.

Period Cost

Costs that are expensed in the period in which they are incurred, without direct link to production activity, such as selling, general, and administrative expenses.

Contribution Margin Ratio

A profitability ratio that measures the percentage of sales revenue that exceeds variable costs, indicating how much contributes to fixed costs and profit.

Variable Cost Ratio

A measure of a company's variable costs as a percentage of sales, which shows the proportion of sales that is consumed by variable costs.