Fred Has a Credit Card Which Uses the Previous Balance

question 115

Multiple Choice

Fred has a credit card which uses the previous balance method and charges 21 percent annual interest compounded daily, and has a 30 day billing period. He put a $7900 expense on his card and could not pay it off until eight days after the due date when he received his paycheck. How much does he owe in total at that time?

• A)$8038.25
• B)$7936.36
• C)$8036.36
• D)Insufficient information

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Definitions:

Price Standard

A predetermined cost that represents what should be paid for a unit of input, such as materials or labor.

Materials Price Variance

Materials price variance is the difference between the actual cost of materials used in production and the standard cost expected, it can indicate changes in market prices or purchasing efficiency.

Quantity Standard

A specific measure established to gauge the expected or optimal quantity of input required to produce a unit of output.

Price Standard

A pre-determined cost per unit of input or output, used for setting budgets and measuring performance.