Costs That Are Directly Traceable to a Unit of Business

question 58

Multiple Choice

Costs that are directly traceable to a unit of business or segment being analyzed are called:

• A) Direct costs
• B) Sunk costs
• C) Variable costs
• D) Overhead costs

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Definitions:

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest obligations, calculated as earnings before interest and taxes divided by interest expense.

Times Interest Earned Ratio

A financial indicator assessing a company's capacity to pay its interest costs using its earnings before interest and taxes.

Year 2

Generally refers to the second year of operation, or the second year being considered in a multi-year analysis.

Debt-to-Equity Ratio

An indicator of the relative amounts of shareholders' equity and debt financing employed to support a company's assets.