When the Simple Interest Method Is Used to Determine Finance

question 53

Multiple Choice

When the simple interest method is used to determine finance charges,the interest is calculated based on the

• A) ending balance of the loan.
• B) average outstanding balance.
• C) actual balance of the loan.
• D) beginning balance of the loan.
• E) none of these.

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Definitions:

Absorption Cost

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit from an investment by the cost of the investment.

Price Per Unit

Price per unit describes the cost of a single unit of product or service, providing a basis for evaluating and comparing the value of similar items.

Full Cost

The comprehensive total of all costs associated with producing a product or delivering a service, including direct, indirect, fixed, and variable costs.