The Three Most Common Cost Behavior Classifications Are

question 197

Multiple Choice

The three most common cost behavior classifications are

• A) variable costs, product costs, and sunk costs
• B) fixed costs, variable costs, and mixed costs
• C) variable costs, period costs, and differential costs
• D) variable costs, sunk costs, and opportunity costs

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Definitions:

Cash Generated

The amount of money produced by a company's normal business operations after accounting for operational expenses and working capital.

Additional Funds Needed

Estimated funds required beyond what is currently available to the business to finance projected growth.

Payout Ratio

A financial metric used to measure the percentage of earnings paid to shareholders in dividends, indicating how much money a company is returning to shareholders versus reinvesting.

AFN Equation

Additional Funds Needed equation, a financial formula used to estimate the additional amount of funding a firm would require to support its increased level of sales.