Tom's Textiles Shipped the Wrong Material to a Customer, Who

question 50

Multiple Choice

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit accounts receivable and debit:

• A) Sales.
• B) Sales discount.
• C) Sales returns.
• D) Sales allowances.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or sales activity, such as raw materials or direct labor.

Direct Proportion

A relationship between two variables where an increase in one results in a proportional increase in the other.

Activity Level

In accounting and management, refers to the volume of units produced, hours worked, or any other measure of output that drives the costs in a business.

Production Supervisor's Salary

An overhead expense associated with the compensation paid to an individual responsible for overseeing and managing the production operations.