Fact Pattern 31-5 Lender Inc

question 1

Multiple Choice

Fact Pattern 31-5 Lender Inc. owns more than 90 percent of the stock of Mortgage Inc .
Refer to Fact Pattern 31-5. Lender Inc. is

• A) an insufficient company.
• B) a parent corporation.
• C) a subsidiary corporation.
• D) a consolidated company.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or sales, such as raw materials and direct labor.

Activity Level

A measurement of the volume of production or the quantity of services provided.

Activity Bases

Measures that assign costs to cost objects based on their use of activities; used in activity-based costing.

Mixed Cost

A cost consisting of both fixed and variable components and changes in response to variations in production or sales levels.