The Linens Department of a Large Department Store Is

question 4

Multiple Choice

The linens department of a large department store is

• A) not a responsibility center.
• B) a profit center.
• C) a cost center.
• D) an investment center.

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Definitions:

Fixed Expenses

Costs that do not change in total with changes in the volume of activity, such as rent, salaries, and insurance premiums.

Variable Expenses

Costs that change in proportion to the level of business activity or production volume.

Fixed Expenses

Fixed expenses are costs that do not change in the short term regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Margin Of Safety

The excess of budgeted (or actual) dollar sales over the break-even dollar sales.