A Variable Cost Is a Cost That

question 208

Multiple Choice

A variable cost is a cost that

• A) varies per unit at every level of activity.
• B) occurs at various times during the year.
• C) varies in total in proportion to changes in the level of activity.
• D) may or may not be incurred depending on management's discretion.

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Definitions:

Fixed Assets

Physical assets with a long lifespan that serve operational purposes in a business and aren't likely to be sold or used up within a year.

Stockholders

Individuals or entities that own shares in a corporation, thus holding partial ownership of the company.

Current Assets

Refers to assets that a company expects to convert into cash within one year or one business cycle, whichever is longer.

Net Fixed Assets

The value of a company’s fixed assets minus any accumulated depreciation, representing the actual value of the company's fixed assets.