Pippen CoRecorded Operating Data for Its Shoe Division for the Year

question 8

Multiple Choice

Pippen Co.recorded operating data for its shoe division for the year.The company's desired return is 5%. $$\begin{array} { l r } \text { Sales } & \$ 1,000,000 \\\text { Contribution margin } & 200,000 \\\text { Total direct fixed costs } & 120,000 \\\text { Average total operating assets } & 400,000\end{array}$$ Which one of the following reflects the controllable margin for the year?

• A)20%
• B)50%
• C)$60,000
• D)$80,000

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Definitions:

Machining Costs

Expenses associated with the operation of machine tools in the manufacturing process, including labor, maintenance, and the wear and tear of the machinery.

Quality Inspection Costs

Expenses associated with the process of checking goods or services for compliance with required quality standards.

Activity Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate reflection of actual costs involved in production.

Cost Of Resources

The total expense incurred in utilizing assets, materials, or services for the purpose of producing goods or providing services.