Refer to the Exhibit

question 33

Multiple Choice

Refer to the exhibit. The graph shows a customer with a software product and highlights the number of paid-for licenses (shown with the orange line) and the number of users actively using the product (shown with the blue line) . Which statement about the customer is true?

• A) The customer has a high probability to renew and will include an expanded opportunity
• B) The customer's usage is too low to correctly measure the chance of their retention
• C) The customer has increased usage, which shows a strong indicator of renewal
• D) The customer's usage has seen a recent decline and the chance of them churning will be higher

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Definitions:

Conversion Cost

Conversion cost is the sum of direct labor and manufacturing overhead costs incurred to convert raw materials into finished goods.

Product Cost

The expenses incurred to create a product, including direct materials, direct labor, and manufacturing overhead.

Direct Materials

Raw materials that can be directly traced to the manufacturing of a product.

Period Cost

Costs that are expensed in the period in which they are incurred, as opposed to being capitalized or included in the cost of goods sold.