Cost Allocation Base Refers to The

question 153

Multiple Choice

Cost allocation base refers to the:

• A) total allocated costs
• B) cost objectives
• C) cost driver
• D) total costs to be allocated

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Definitions:

Target Profit

The anticipated profit a business aims to achieve within a specific period, guiding pricing and production decisions.

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, indicating the percentage of each sales dollar available to cover fixed costs and provide profit.

Fixed Monthly Expenses

Regular expenses that do not vary in amount from month to month, such as rent and salaries.

Net Operating Income

A measure of a company's profitability from its regular, core business operations, excluding deductions of interest and taxes.