Laramie Company Signed a Contract with a Service Provider for Security

question 87

True/False

Laramie Company signed a contract with a service provider for security services at a rate of $270 per month for the period of January through June.Laramie Company will pay the service provider the entire amount at the end of June.The company makes adjusting entries each month.During the month of June,it should record total security expense of $540.

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Definitions:

Variable Production Cost

Costs that vary directly with the volume of production, including direct materials and direct labor, and sometimes variable portions of manufacturing overhead.

Stamping Machine

A machine used in manufacturing to shape or cut materials using dies and high pressure.

Constrained Resource

A factor that limits the output of a process or system, such as a machine, worker, or material that is in short supply.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating how much contributes to covering fixed costs and profit.