If Each Motorcycle Requires a Belt That Costs $20 and 2,000

question 14

Multiple Choice

If each motorcycle requires a belt that costs $20 and 2,000 motorcycles are produced for the month, the total cost for belts is ________.

• A) considered to be a direct fixed cost
• B) considered to be a direct variable cost
• C) considered to be an indirect fixed cost
• D) considered to be an indirect variable cost

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Definitions:

Financial Statement

Documents that provide an overview of a company's financial condition in both short and long term, including balance sheets, income statements, and statements of cash flows.

Permanent/Temporary

In accounting, refers to the classification of accounts based on their longevity; permanent accounts are cumulative over time (e.g., assets, liabilities, equity), while temporary accounts are closed at the end of each accounting period (e.g., revenues, expenses).

Normal Balance

The side (debit or credit) on which increases to the account are recorded, based on the type of account (asset, liability, equity, revenue, expense).

Financial Statement

A written report that quantitatively describes the financial health of a company, including balance sheets, income statements, and cash flow statements.