A Control System That Identifies the Various Activities Needed to Produce

question 73

Multiple Choice

A control system that identifies the various activities needed to produce a product and determines the cost of those activities is referred to as

• A) open-book management.
• B) an economic value-added system.
• C) activity-based costing.
• D) an inappropriate control system.
• E) none of these.

---

Definitions:

Margin of Safety

The difference between actual sales and the break-even point, indicating how much sales can fall before a business incurs a loss.

Fixed Expenses

Costs that do not vary with the level of production or sales, remaining constant over a period of time.

Variable Expenses

Charges that adjust directly with the volume of production or sales, encompassing costs related to raw materials and direct labor.

Fixed Expenses

Costs that do not change with the level of production or sales within a certain range and for a specific period.