All Costs That Do Not Vary with the Size of the Order

question 84

Multiple Choice

All costs that do not vary with the size of the order but are incurred each time an order is placed are referred to as

• A)the material cost and are denoted by C.
• B)the fixed ordering cost and are denoted by S.
• C)the holding cost and are denoted by H.
• D)the purchase price and are denoted by P.

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Definitions:

Short-term Note Payable

A short-term note payable refers to a debt obligation that is due for repayment within a year or less.

Contingent Liability

A potential obligation that may arise depending on the outcome of a future event, not recognized on the balance sheet unless occurrence is probable and the amount can be reasonably estimated.

Estimated Liability

A potential financial obligation that may arise in the future, recognized in accounting based on probable expenditures.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.