MNK Corporation Is a Large Public Company That Employs Numerous

question 37

Multiple Choice

MNK Corporation is a large public company that employs numerous accounts receivable clerks. Their jobs involve processing invoices and keeping the accounting records updated. Which of the following is the most likely cost driver for the accounts receivable activity cost pool?

• A) Number of journal entries
• B) Number of product lines produced by MNK
• C) Number of invoices
• D) Average dollar amount for each credit sale

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Definitions:

Sales

The revenue generated from goods or services sold by a company in the ordinary course of its business.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted; it contributes towards covering fixed costs and generating profit.

Administrative Expenses

Costs associated with the general management of a business, such as salaries of senior executives, legal and financial charges, marketing, and office supplies.

Direct Materials

Materials that can be directly linked to the manufacturing of particular products or services.