If a Contract Modification Does Not Create a Separate Contract

question 64

Multiple Choice

If a contract modification does not create a separate contract, it is accounted for using

• A) either a cumulative catch-up adjustment or a retrospective approach.
• B) either a cumulative catch-up adjustment or a prospective approach.
• C) either a retrospective approach or a prospective approach.
• D) either a cumulative catch-up adjustment, a prospective approach, or a retrospective approach.

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Definitions:

Step-Variable Cost

Costs that remain fixed over a specific range of production or activity, but jump to a higher level once a certain threshold is exceeded.

Fixed Cost

Expenses that do not change with the level of output or sales, such as rent or salaries.

Mixed Cost

Expenses that contain both fixed and variable components and change in total with the level of activity but not proportionately.

Certified Operators

Individuals who have received official recognition or certification to operate machinery or equipment according to set standards and regulations.