The Setup Cost Incurred in Preparing a Machine to Produce

question 26

Multiple Choice

The setup cost incurred in preparing a machine to produce a batch of product is an example of a

• A) fixed charge.
• B) random charge.
• C) sunk cost.
• D) variable cost.

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Definitions:

Balance

The total amount of funds in an account or the difference between the total debits and credits in an account.

Account

A record summarizing all the transactions pertaining to a single thing in the accounting world, such as a specific person, a business entity, or a specific asset.

Collection Float

The time period between when a check is deposited into a bank account and when the amount is made available.

Cheques

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or a specified person.