Total Payroll for a Given Week Is $12,000 $\begin{array}{l}\text { Estimated Liability for Vacation Pay }&840\\\text { Cash }&&840\end{array}$

question 175

Multiple Choice

Total payroll for a given week is $12,000.If 70 percent of the company's employees typically qualify to receive two weeks' paid vacation per year,assuming 50 working weeks,the entry to record the estimated liability for vacation pay for the week is:

• A)
• \(\begin{array}{l}
• \text { Estimated Liability for Vacation Pay }&840\\
• \text { Cash }&&840
• \end{array}\)
• B)
• \(\begin{array}{l}
• \text { Vacation Pay Expense } &480\\
• \quad \text { Cash }&&480
• \end{array}\)
• C)
• \(\begin{array}{llr}
• \text {Vacation Pay Expense } & 336\\
• \text {Estimated Liability for Vacation Pay } && 336\\
• \end{array}\)
• D)
• \(\begin{array}{llr}
• \text {Cash } &168\\
• \text { Estimated Liability for Vacation Pay} &&168\\
• \end{array}\)

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Definitions:

Fixed Cost Per Unit

The total fixed costs of production divided by the number of units produced, indicating how cost allocation changes with production volume.

Production Increases

The rise in the number of goods and services produced by a company or country, often indicative of economic growth.

Variable Costs

Costs that vary directly and proportionally with the level of production or sales volume, such as raw materials and direct labor costs.

Fixed Costs

Charges that stay the same, no matter the production or sales figures, such as rental fees, employee salaries, and insurance premiums.