Thompson Company Makes and Sells Power Tools

question 153

Multiple Choice

Thompson Company makes and sells power tools.The budgeted sales are $450,000, the budgeted variable costs are $150,000, and the budgeted fixed cost is $230,000.What is the budgeted variable cost ratio? (Note: Round answer to two decimal places.)

• A) 54.66%
• B) 33.33%
• C) 89.50%
• D) 19.23%
• E) 50.50%

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Definitions:

Assets

Resources owned or controlled by a business, considered to have economic value and expected to benefit future operations.

Prepaid Rent Expense

Prepaid rent expense is an advance payment for rent that is recorded as an asset on the balance sheet until it is used or consumed in future periods.

Liability

An obligation that a corporation or individual has to another entity, typically financial in nature, such as loans or accounts payable.

Asset

Resources owned by an individual or business that have economic value and can be used to meet debts, commitments, or legacies.