A Firm That Only Utilizes 40% of Its Fixed Assets

question 169

True/False

A firm that only utilizes 40% of its fixed assets capacity to generate $1,000,000 in sales will be able to increase sales to $4,000,000 before full capacity is reached and plant and equipment would have to be increased.

Comprehend the principles of internal control within the context of job order cost accounting.

Know the impact of sales on cost accounts like Cost of Goods Sold and Work in Process Inventory.

Differentiate between job order costing and process costing with respect to their application scenarios.

Understand the flow of costs in job order costing, including the recording of transactions related to raw materials, labor, and overhead.

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Definitions:

Corrective Action

Steps taken to identify, eliminate, and prevent the recurrence of errors or problems in processes, products, or systems.

Legally Defensible

Capable of being maintained or upheld in a court of law, especially referring to actions, policies, or practices compliant with legal standards.

Performance Management System

A systematic process by which an organization involves its employees in improving organizational effectiveness and achieving goals.

Calibration Meeting

A meeting often held by managers to ensure consistency in evaluating employee performance, aligning ratings across different evaluators to maintain fairness.