Use the Following Information for Questions
Truckel, Inc -The Fixed Overhead Is an Allocated Common Cost

question 75

Multiple Choice

Use the following information for questions
Truckel, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: $\begin{array}{lr}\text { Direct materials and direct labor } & \$ 11 \\\text { Variable overhead } & 5 \\\text { Fixed overhead } & 8\\\text { Total }&\$24\end{array}$
-The fixed overhead is an allocated common cost. How much is the relevant cost of the wicket?

• A) $36
• B) $24
• C) $19
• D) $16

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Definitions:

Margin of Safety

The difference between actual or projected sales and the break-even point. It indicates the amount of sales decline a business can endure before it starts incurring losses.

Variable Costs

Costs that change in proportion to the level of activity or production volume.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Operating Income

A measure of a company's profit generated from its core business operations, excluding deductions of interest and tax.