A Business Operated at 100% of Capacity During Its First

question 48

Multiple Choice

A business operated at 100% of capacity during its first month and incurred the following costs: ​
If 500 units remain unsold at the end of the month,what is the amount of inventory that would be reported on the variable costing balance sheet?

• A) $41,500
• B) $36,000
• C) $42,800
• D) $38,500

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Definitions:

Recourse Obligation

Recourse obligation refers to a debt or liability for which the borrower is personally responsible, meaning the lender can pursue the borrower's other assets if the primary assets securing the loan fail to satisfy the debt.

U.S. And IFRS Guidance

U.S. and IFRS guidance refers to the accounting standards set by the United States (Generally Accepted Accounting Principles) and the International Financial Reporting Standards, respectively.

Collateralized Borrowing

A loan that is secured by collateral, meaning if the borrower defaults, the lender has the right to seize the asset(s) pledged as collateral.

Surrenders Control

In accounting or finance, refers to the act of a party giving up the authority or power over an asset or decision-making to another party.