A Cost Accumulation System Should Most Likely Be Reevaluated When

question 119

Multiple Choice

A cost accumulation system should most likely be reevaluated when a company has

• A)automated one or more production processes.
• B)introduced new products to its customers.
• C)had its industry deregulated.
• D)all of the above.

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Definitions:

Break-Even Point

The production level or sales volume at which total revenues equal total expenses, resulting in no profit or loss.

Variable Costs

Costs that are directly correlated with the volume of production or sales.

Fixed Costs

Expenses that do not vary with the level of production or sales volumes, such as rent, salaries, and insurance premiums.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.