Which of the Following Is Least Likely to Be Correct

question 24

Multiple Choice

Which of the following is least likely to be correct for a firm that repeatedly stretches its payables?

• A) The firm may receive more favorable status from suppliers due to its volume of purchases.
• B) The firm may reduce its explicit short-term interest expense.
• C) The cost of forgone discounts may exceed the cost of bank credit.
• D) The firm may be labeled as a credit risk.

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Definitions:

Machine-Hours

A measure of the amount of time a machine is operated, used as a basis for allocating manufacturing overhead costs to products.

Machine-Hours

A measure of production time using machines, typically used as a basis for allocating manufacturing overhead to products.

Denominator Level

In cost accounting, refers to the total quantity or capacity used to allocate fixed costs to different cost objects.

Budget Variance

The difference between what was budgeted for a period and what was actually spent or received.