The Following Cost Formula Was Developed Using Monthly Data for a Retail

question 228

Multiple Choice

The following cost formula was developed using monthly data for a retail clothing store:
Total cost = $50,000 + ($250 × number of customers)

The number $250:

• A) is the committed variable.
• B) is the dependent variable.
• C) is the mixed rate.
• D) is the variable rate.

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Definitions:

Present Value Interest Factor

A factor used to calculate the present value of a sum that is to be received in the future, accounting for the time value of money.

Non-Interest Bearing Note

A debt instrument that does not pay interest but is issued at a discount to its redemption value.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, used to assess the worth of an investment.

Sales Returns

Sales returns are transactions where customers return previously purchased merchandise back to the seller, often due to defects or dissatisfaction, leading to a reversal of sale revenue.