If Activity-Based Costing Is Used, Modifications Made by Engineering to the Product

question 27

Multiple Choice

If activity-based costing is used, modifications made by engineering to the product design of several products would be classified as a

• A)unit-level activity.
• B)batch-level activity.
• C)product-level activity.
• D)facility-level activity.

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Definitions:

Break-even Chart

A graphical representation showing the point at which total costs and total revenue are equal, thus indicating no profit or loss.

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the level of production or sales volume, such as raw materials or direct labor costs.

Profit

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining the activities.