If a Company Decreases the Variable Expense Per Unit While

question 91

Multiple Choice

If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative to its previous position will:

• A)shift downward and have a steeper slope.
• B)shift downward and have a flatter slope.
• C)shift upward and have a flatter slope.
• D)shift upward and have a steeper slope.

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Definitions:

Cash Discount

A reduction in the invoice price offered by sellers to encourage early payment by buyers.

Carrying Costs

Expenses incurred for holding inventory over a period, which can include financial costs, storage fees, and loss due to obsolescence.

Default Rate

The percentage of borrowers failing to make payments on their loans within a specific period.

Credit Policy

A set of guidelines that a company follows to determine the credit terms and limits for customers, impacting how credit is extended and collected.