Which of the Following Would Be Classified as a Variable

question 462

Multiple Choice

Which of the following would be classified as a variable cost for the local Texaco station?

• A) interest payments to a local bank for a 5-year loan
• B) the total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each week
• C) the premiums paid for liability insurance, which are constant throughout the life of the contract
• D) the opportunity cost of money used to finance the installation of some new pumps

---

Definitions:

Noncumulative Preferred Stock

This type of preferred stock does not entitle its holders to claims on dividends missed in the past if they were not declared in those years.

Common Stock

A form of corporate equity ownership, a type of security representing an ownership share in a corporation.

Dividends

A portion of a company's earnings distributed to shareholders as a reward for their investment.

Par Common Stock

The face value of common shares issued by a company, which is noted on the share certificate.