A Company Usually Processes 20,000 Orders at a Total Cost

question 13

Multiple Choice

A company usually processes 20,000 orders at a total cost of $250,000. During the year, only 10,000 orders were processed. What is the cost of unused activity?

• A)$200,000
• B)$240,000
• C)$150,000
• D)$125,000

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Definitions:

Gross Margin

The difference between revenue and cost of goods sold, which represents the percentage of sales revenue that exceeds the cost directly associated with the production of goods sold.

Automated Jointer

A machine tool used in woodworking operations to flatten or straighten the edges of wood pieces, operated with minimal human intervention.

Capacity

The maximum amount that something can contain or produce, often used in the context of production facilities.

Traditional Costing System

An accounting method that assigns indirect costs to products based on a predetermined overhead rate.