Which of the Following Is True Regarding Transportation Costs When

question 56

Multiple Choice

Which of the following is true regarding transportation costs when the designation FOB is used?

• A) The selling price includes transportation costs.
• B) The selling price does not include transportation costs.
• C) Both the buyer and seller bear transportation costs with the costs apportioned at a rate of 50% to the buyer and 50% to the seller.
• D) Both the buyer and seller bear transportation costs with the loss being proportioned 75% to the buyer and 25% to the seller.
• E) Both the buyer and seller bear transportation costs with the loss being proportioned 25% to the buyer and 75% to the seller.

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Definitions:

Clay Figurines

Small sculpted figures made of clay, often used as decorative items or collectibles.

Fixed Manufacturing Cost

Costs that do not vary with the level of production output, such as rent, property taxes, and salaries of permanent employees.

Relevant Range

The span of activity levels within which the assumptions made about cost behavior and business operations are valid.

Variable Cost

Financial outlays that change directly with changes in production or sales amounts, such as direct labor and raw materials.