The Akron Factory Employs Two Quality Control Inspectors at an Annual

question 41

Multiple Choice

The Akron factory employs two quality control inspectors at an annual salary of $70,000 each.These salaries should be classified as:

• A)Common fixed cost.
• B)Variable cost.
• C)Committed fixed cost.
• D)Controllable fixed cost.

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Definitions:

Adverse Selection

A situation in which asymmetric information leads to the selection of undesirable alternatives in transactions.

Pre-Contractually

Refers to activities, negotiations, or conditions that occur before the formal agreement or contract is signed.

Progressive Insurance

An American insurance company known for providing a wide range of insurance products, including auto and homeowners insurance.

Adverse Selection

A situation where asymmetrical information leads to transactions between parties where the high-risk party is more likely to participate than the low-risk party.