Three Different Divisions of a Toy Manufacturing Company Are Estimating

question 77

Multiple Choice

Three different divisions of a toy manufacturing company are estimating costs for their human resources departments. Each division has a cost structure that is different from the other divisions' and those structures are represented by the following cost behavior patterns. Which cost is best described as variable?

• A) Cost A
• B) Cost B
• C) Cost C
• D) Cost A and Cost C

---

Definitions:

Accrual

A method in accounting that recognizes financial events by matching revenues with expenses at the time the transaction occurs, not when payment is made or received.

Supplies Expense

The cost associated with the consumable items used in the operation of a business, such as office supplies or cleaning materials.

Adjusting Journal Entry

An entry in accounting that is made at the end of an accounting period to record any unrecognized income or expense for the period.

Income Tax Expense

The cost incurred by businesses or individuals due to earnings, represented as an expense in financial statements and affecting net income.