Which One of the Following Is the Best Example of a Step

question 54

Multiple Choice

Which one of the following is the best example of a step cost for Ace Manufacturing?

• A)Paying a higher factory utility bill for the month of June.
• B)Cutting back health care coverage for employees.
• C)Terminating the manufacturing quality control employees.
• D)Opening a new assembly line for one of the company's most popular products as a result of its original assembly line continually operating at capacity.

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Definitions:

Direct Materials

Divulged as essential components, direct materials primarily encompass tangible substances employed in the fabrication of a product, distinctly identifiable in the final offering.

Materials Requisitions

A document used to request the transfer of materials from a storeroom to a production area.

Controlling Account

The account in the general ledger that summarizes the balances of the accounts in a subsidiary ledger.

General Ledger

The primary ledger, when used in conjunction with subsidiary ledgers, that contains all of the balance sheet and income statement accounts.