Which Is Most Clearly a Variable Cost

question 99

Multiple Choice

Which is most clearly a variable cost?

• A)Rent
• B)Insurance premiums
• C)Salaries of employees under long-term contract
• D)Interest payments
• E)Wages of production workers

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Definitions:

FIFO Method

"First In, First Out," an inventory valuation method assuming that the first items purchased are the first ones sold, affecting the cost of goods sold and inventory value.

Cost Flow Method

An accounting technique used to value inventory and determine the cost of goods sold by assuming a flow of costs.

FOB Shipping Point

A shipping term indicating that the buyer takes responsibility for goods and their transportation costs as soon as the goods leave the seller's premises.

Goods In Transit

Merchandise or stock that has been shipped by the seller but has not yet been received by the purchaser.