Which of the Following Is a Typical Example of a Variable

question 11

Multiple Choice

Which of the following is a typical example of a variable cost?

• A) cost of maintaining inventory
• B) rent on a building
• C) executive salaries
• D) insurance premiums
• E) lease on delivery trucks

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Definitions:

Rental

The payment, usually monthly, owed by a tenant to a landlord for the use of real estate, equipment, or other properties.

Insurance

A practice or agreement whereby a company provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.

Economic Order Quantity

An inventory management formula used to determine the optimal order quantity that minimizes the total costs related to ordering, receiving, and holding inventory.

Ordering Costs

Expenses incurred in placing and receiving orders from suppliers, including costs related to processing and shipping.