Use the Following Information to Determine the Cash Fixed Costs

question 47

Multiple Choice

Use the following information to determine the cash fixed costs: Administrative expenses = $200,000; Marketing expenses = $180,000; Depreciation expenses = $100,000; and Interest expenses = $20,000.

• A) $380,000
• B) $400,000
• C) $480,000
• D) $500,000
• E) $620,000

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Definitions:

Total Cost Concept

A concept used in applying the cost-plus approach to product pricing in which all the costs of manufacturing the product plus the selling and administrative expenses are included in the cost amount to which the markup is added.

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and overhead costs.

Administrative Expenses

Costs associated with the general management and administration of a business, such as salaries of executive personnel, legal and accounting fees.

Operating Capacity

The maximum output that a company can produce under normal conditions over a specific period.