Using the High-Low Method, the Variable Rate for Maintenance Is

question 3

Multiple Choice

Using the high-low method, the variable rate for maintenance is:

• A) $0.40.
• B) $0.80.
• C) $1.20.
• D)$2.50.

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Definitions:

Discount Period

The timeframe during which a discount is offered for early payment on sales made on credit, aiming to encourage prompt payment.

Credit Period

The duration of time a buyer is allowed to pay for goods or services purchased on credit, typically measured in days from the invoice date.

Sales Returns and Allowances

A deduction from gross sales that reflects products returned by customers or allowances granted for damaged or unsatisfactory goods.

Contra-Sales Account

An account used to record sales returns, allowances, and discounts which offsets the gross sales on the income statement.