Fixed Costs

question 68

Multiple Choice

Fixed costs:

• A) are a constant percentage of sales revenues.
• B) vary with the level of depreciation expense.
• C) are constant regardless of the level of output.
• D) are inversely related to the level of output.

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of another entity, but not control those policies.

Net Income

The amount of profit a company has left over after paying all its expenses and taxes.

Dividend

A portion of a company's earnings distributed to its shareholders, typically in the form of cash or additional shares.

Parent Company

A company that holds a controlling interest in one or more other companies, called subsidiaries, through ownership of their shares.