The Fixed Overhead Spending Variance

question 204

Multiple Choice

The fixed overhead spending variance

• A) is usually not significant.
• B) is made up of many individual items.
• C) is the difference between actual costs and budgeted costs.
• D) merits investigation only if the variance is material.
• E) All of these.

Understand the importance of cash discounts in the decision to offer credit.

Comprehend how changes in credit terms affect the cost of credit for customers.

Recognize the terms used in credit management such as receivables period and inventory turnover.

Understand the methodologies for analyzing the creditworthiness of potential customers.

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Definitions:

Firm

A business organization or entity engaged in commercial, industrial, or professional activities.

C-type Corporation

A corporation that is taxed separately from its owners, often referred to as a C corporation.

Business Organization

A business organization is a legal and operational structure created to conduct commercial activities, such as corporations, partnerships, and sole proprietorships.

Liabilities

Financial obligations or debts that an entity owes to others, which must be settled over time through the transfer of assets or services.