A Cost Object Is

question 13

Multiple Choice

A cost object is:

• A) a collection of costs to be assigned.
• B) a responsibility center, product, or service to which cost is to be assigned.
• C) the tool used to charge cost dollars to user departments.
• D) the primary function of a responsibility accounting system.
• E) a common cost.

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Definitions:

Break-even Sales

The amount of revenue needed to cover total costs, both fixed and variable, indicating the point at which a company neither makes a profit nor incurs a loss.

Margin of Safety

The difference between actual or projected sales and the sales level necessary to break even, as a buffer against uncertainty.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating how much contributes towards covering fixed costs and profit.

Variable Costs

Costs that vary in direct proportion to changes in the level of production or sales.