Which of the Following Is a Benefit of Selling on Credit

question 53

Multiple Choice

Which of the following is a benefit of selling on credit?

• A)Revenues are increased by making sales to a wider range of customers.
• B)Expenses are reduced by making sales to a wide range of customers.
• C)Some customers do not pay, creating an expense.
• D)Cash is received sooner.

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Definitions:

Direct Materials

Direct materials are the raw materials that can be directly traced to the production of goods.

Variable Overhead

Expenses that fluctuate with production volume, including costs like utilities and indirect labor, that are not directly tied to specific units of production.

Absorption Costing

A costing technique that incorporates every element of manufacturing expenditure, such as direct materials, direct labor, along with variable and fixed manufacturing overheads, into the pricing of a product.

Product Unit Cost

The total cost associated with producing a single unit of a product, including direct and indirect costs.