A Cost That Changes in Total in Direct Proportion to a Change

question 46

Multiple Choice

A cost that changes in total in direct proportion to a change in the cost driver is a:

• A) variable cost.
• B) fixed cost.
• C) semivariable cost.
• D) step-variable cost.

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Definitions:

Simple Interest

Interest calculated only on the principal amount, or on that part of the principal amount which remains unpaid.

Principal

The principal refers to the initial amount of money lent or invested, excluding any interest or growth.

Annual Rate

The interest rate for a period of one year, often used as a benchmark for savings or loan interest calculations.

Investment

The process of distributing funds or other resources with the goal of earning returns or profits.