Right or Wrong? Suppose That You Receive a Credit Card $$\begin{array} { l } I = \text { Prt } \\= \$ 1,050 ( 0.15 ) \left( \frac { 1 } { 12 } \right) \\= \$ 13.125\end{array}$$

question 177

Multiple Choice

Right or Wrong? Suppose that you receive a credit card bill on December 1 for $1,050. You mail in a payment of $650 the same day, and it is received in 7 days. If the interest is charged at 15% APR and is calculated according to the adjusted balance method, the amount of interest is $$\begin{array} { l } I = \text { Prt } \\= \$ 1,050 ( 0.15 ) \left( \frac { 1 } { 12 } \right) \\= \$ 13.125\end{array}$$ or (to the nearest cent) $13.13

• A) Wrong
• B) Right

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Definitions:

Equivalent Units

A method used in cost accounting to measure the work done on inventory during a period, which considers partially completed units as a fraction of a full unit.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished products.

FIFO Method

An inventory valuation method that assumes the first items placed in inventory are the first sold, standing for "first in, first out."

Process Costing

An accounting method that accumulates direct and indirect costs of a continuous production process and assigns them to individual units of output.