The First Step in Conducting a Cost Analysis Is To

question 34

Multiple Choice

The first step in conducting a cost analysis is to:

• A) Determine whether to use a full-cost or a contribution-margin approach
• B) Allocate natural costs to functional cost centers
• C) Break costs of revenues into relatively large blocks so that little meaning is lost within each block
• D) Determine which segment of the population most needs to be analyzed
• E) Specify the purpose for which the study is being done

---

Definitions:

Break-even Sales

The amount of revenue required to cover both the fixed and variable costs of production, resulting in no net profit or loss.

Common Fixed Expenses

Expenses that remain constant regardless of the level of production or sales activities, such as rent, salaries, and insurance.

Operating Period

The span of time during which a business or a particular machinery is operational or in use.

Net Operating Income

Revenue from the primary business activities of a company, with no deductions for interest and taxes.