For Each of the Following Definitions, Indicate the Key Term

question 55

Essay

For each of the following definitions, indicate the key term from the list that best matches by placing the appropriate definition.
A. Allowable costs
B. Cost principle
C. Cost objective
D. Indirect costs
E. Direct costs
F. Activity-based costing
________ 1. A system that identifies specific costs that drive the cost of service or production activities
________ 2. Costs incurred that cannot be identified specifically with a cost objective
________ 3. Costs that meet specific criteria determined by the resource provider
________ 4. A program, function, activity, award, organizational subdivision, contract, or work unit established for the accumulation of costs

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Definitions:

Variable Expense

Expenses that vary directly with the amount of production or the degree of operational activity.

Contribution Margin Ratio

The percentage of each sale that exceeds the variable costs of production.

Break-even Point

The level of production or sales at which total revenues equal total expenses, resulting in neither profit nor loss.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the cushion a business has before it incurs a loss.