Assume That You and Your Brother Plan to Open a Business

question 39

Multiple Choice

Assume that you and your brother plan to open a business that will make and sell a newly designed type of sandal. Two robotic machines are available to make the sandals, Machine A and Machine B. The price per pair will be $20.00 regardless of which machine is used. The fixed and variable costs associated with the two machines are shown below. What is the difference between the breakeven points for Machines A and B? (Hint: Find BEB - BEA)

• A) 3,154
• B) 3,505
• C) 3,894
• D) 4,327
• E) 4,760

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Definitions:

Resource Consumption

The amount of resources used during a process, such as raw materials, energy, or labor.

Activity Rate

The cost incurred per unit of activity, used in activity-based costing to allocate overhead costs to products.

Overhead Cost

Expenses related to the operation of a business that are not directly tied to a specific product or service, such as rent, utilities, and administrative salaries.

Activity Cost Pool

A grouping of all the costs related to a particular business activity, facilitating more accurate allocation of overhead costs to products or services.