Cindy Smith, VP of Finance at Digital Components, Inc

question 42

Multiple Choice

Cindy Smith, VP of Finance at Digital Components, Inc.(DCI) , theorizes that the discount level offered to credit customers affects the average collection period on credit sales.Accordingly, she has designed an experiment to test her theory using four sales discount rates (0%, 2%, 4%, and 6%) .Cindy wants to control for the size of the customer but not to test for it as the main variable of interest so she classified DCI's credit customers into three categories by total assets (small, medium, and large) .Then, she randomly assigned four customers from each category to a sales discount rate.In Cindy's experiment "total asset size of credit customer" is ___.

• A)a surrogate variable
• B)the dependent variable
• C)a blocking variable
• D)a treatment variable
• E)a constant

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Definitions:

Materials Costs

Expenses incurred in the acquisition of raw materials used in production.

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the expense to convert raw materials into finished products.

Ending Work

Ending work often refers to the inventory of unfinished goods at the end of an accounting period.

Conversion Cost

Costs incurred during the manufacturing process, which include direct labor and overhead costs, to convert raw materials into finished products.