The Difference Between the Unit Sales Price and the Variable

question 157

Multiple Choice

The difference between the unit sales price and the variable cost per unit is called:

• A) Operating leverage.
• B) The contribution margin.
• C) The gross profit.
• D) The net profit.
• E) The marginal revenue.

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Definitions:

Plantwide Overhead Rate

A unified rate employed across the entire manufacturing facility to allocate overhead expenses to products.

Machine Hours

A measure of the amount of time that machinery is operating and being used for production within a given period.

Direct Labor Hours

The number of labor hours spent by employees directly involved in the manufacturing process of a product.

Departmental Overhead Rate

A method for allocating overhead costs to specific departments based on relevant activity drivers, aiding in more accurate cost assessment.