The Admission of a New Partner Under the Bonus Method

question 43

Multiple Choice

The admission of a new partner under the bonus method will result in a bonus to

• A)the old partners only.
• B)the new partner only.
• C)either the new partner or the old partners, but not both.
• D)none of the above.

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Definitions:

Total Variable Cost

The overall expenses that change in proportion to the level of production or business activity.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, showing the cost of fixed resources per unit of output.

Total Fixed Costs

Expenses incurred by a business that do not vary with the level of production or sales, including lease payments and salaries of permanent staff.

Total Variable Costs

The sum of all costs that vary with the level of production, including materials and labor.