For a Large Firm That Produces and Sells Automobiles, Which

question 175

Multiple Choice

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

• A)the $20 million payment that the firm pays each year for accounting services
• B)the cost of the steel that is used in producing automobiles
• C)the rent that the firm pays for office space in a suburb of St. Louis
• D)All of the above are correct.

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period for more accurate financial statements.

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered or used but not yet paid for.

Sales

The total amount charged customers for merchandise sold, including cash sales and sales on account.

Interest-bearing Note

An interest-bearing note is a debt instrument in which the borrower agrees to pay the lender interest in addition to repaying the principal amount borrowed.