In Terms of Cost Behavior, Supervisory Salaries and Direct Labor

question 117

Multiple Choice

In terms of cost behavior, supervisory salaries and direct labor are classified as

• A) fixed and variable, respectively.
• B) both variable.
• C) both fixed.
• D) mixed and fixed, respectively.

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Definitions:

Accounts Receivable

Funds that customers owe to a company for products or services received but not yet compensated for.

Accounts Payable

Money owed by a company to its creditors for goods and services received but not yet paid for.

Operating Cycle

The period of time it takes for a company to purchase inventory, sell products, and collect cash from customers, indicating the efficiency of a business's operations.

Inventory

Inventory comprises all the goods and materials held by a company for the purpose of resale or incorporation into their product.