Within a Business Organization, a Profit Center That Is Self-Supporting

question 74

Multiple Choice

Within a business organization, a profit center that is self-supporting in terms of sales, markets, production, and other resources is known as a

• A) profit entity.
• B) strategic business unit.
• C) marketing program.
• D) small business.
• E) diversified corporation.

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Definitions:

Fixed Manufacturing Overhead

Costs associated with production that do not vary with the level of output, such as depreciation of machinery and the salary of the factory manager.

Job Cost

The total cost of labor, materials, and overhead allocated to a specific job or project.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or job orders, calculated before the accounting period begins based on estimated costs and activity levels.

Direct Labor-hours

Refers to the total hours worked by employees who are directly involved in the production process, directly affecting the manufacturing of goods.