An Example of a Cost That Is Variable with Respect

question 46

Multiple Choice

An example of a cost that is variable with respect to the number of units produced is:

• A) insurance on the headquarters building.
• B) power to run production equipment.
• C) supervisory salaries.
• D) depreciation of factory facilities.

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Definitions:

Net Operating Working Capital

The difference between a company's current assets and its current liabilities, excluding short-term debt. It is indicative of a company's operational liquidity.

Balance Sheet

A report that provides an overview of a business's financial position, including what it owns (assets), owes (liabilities), and the value that remains for the shareholders (equity) at a particular moment.

Current Liabilities

Current liabilities are a company's debts or obligations that are due within one year.

Free Cash Flow

A financial metric that represents the amount of cash generated by a company after accounting for capital expenditures, essential for evaluating its liquidity, flexibility, and overall financial health.