Lincoln Incorporated Observed That When 30,000 Units Were Sold, a Particular

question 40

Multiple Choice

Lincoln Incorporated observed that when 30,000 units were sold, a particular cost amounted to $90,000, or $3.00 per unit. When the sales volume increased by 20%, the cost also increased to $108,000(i.e., $3.00 per unit) . The cost that Lincoln is studying can best be described as a:

• A)variable cost.
• B)fixed cost.
• C)mixed cost.
• D)discretionary fixed cost.
• E)step-fixed cost.

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Definitions:

Bankruptcy Announcement

The official notice given by a company indicating that it is unable to meet its debt obligations and is seeking protection under bankruptcy laws.

Liquidating Dividend

This is a type of dividend paid by a company when it is in the process of shutting down or liquidating its operations, using the assets to pay shareholders.

Special Dividend

A one-time payment made by a company to its shareholders, often indicative of surplus profit not reinvested in the business.

Regular Dividend

A consistent payment made by a company to shareholders out of its profits.