Michael Has a Credit Limit and a Balance of $3,000

question 164

Multiple Choice

Michael has a credit limit and a balance of $3,000 on his Visa card.His car broke down,he charged the $500 repairs to his Visa which he knows put him over his credit limit for the month.His payment is due on the 20th so he made sure that he had his $750 payment to the post office on the 20th.Most likely,what penalties or fees,if any,will he incur?

• A)Only the penalty APR,depending on his credit card company.
• B)Only the over-the-limit fee.
• C)Only the late fee,since his payment will lower his balance below his credit limit.
• D)He will likely incur the penalty APR,as well as an over-the-limit fee and a late fee-because VISA has to receive his payment in its office by the 20th,not have it postmarked by the 20th.
• E)None of the above choices accurately describes the situation.

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Definitions:

ABC Systems

Activity-Based Costing systems, which allocate overhead costs based on the activities that drive those costs, providing more accurate cost information.

Cost Drivers

Factors that cause the cost of an activity or process to change, used in strategic management to control and reduce costs.

Volume

The quantity of something, often used to refer to the total amount of stocks or contracts traded in a financial market.

Departmental Overhead Rate

A rate used to allocate indirect costs to products or services, calculated separately for each department within an organization.