Ed Bostromwants to Reduce His Fixed Expenses

question 32

Multiple Choice

Ed Bostromwants to reduce his fixed expenses.What action would be appropriate?

• A)Get a part-time job
• B)Eat more meals at home than in restaurants
• C)Find a place to live with a lower rent
• D)Save more money for the future
• E)Buy on credit for items that might cost more later

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Definitions:

Operating Profit

A measure of profit that reflects the income earned from the business’s core operations, excluding any costs and revenues from non-operating activities.

Operating Segments

Components of an enterprise that engage in business activities earning revenues and incurring expenses, including revenues and expenses related to transactions with other components of the same enterprise.

LIFO Method

An inventory valuation method that assumes the last items placed in inventory are the first sold during an accounting period, known as Last-In, First-Out.

FIFO Method

An inventory valuation method (First In, First Out) where the oldest items of inventory are recorded as sold first, with costs of the earliest goods purchased being the first to be recognized in determining cost of sales.