Outside the Relevant Range, Variable Costs, Such as Direct Material

question 154

Multiple Choice

Outside the relevant range, variable costs, such as direct material costs ________.

• A) will decrease proportionately with changes in sales volumes
• B) will remain the same with changes in production volumes
• C) will not change proportionately with changes in production volumes
• D) will increase proportionately with changes in sales volumes

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Definitions:

Interest

The cost of borrowing money, typically expressed as a percentage of the principal amount, or the income earned from lending funds.

Straight-Line Method

A depreciation technique that allocates an equal amount of depreciation expense for an asset over its useful life.

General Journal Entry

A record in the general journal that includes all the financial transactions of a company, showing accounts affected, amounts, and whether those amounts are debits or credits.

Amortizing

The process of gradually paying off a debt over time through regular payments.