(Appendix 4B)Cost Allocation Is Still an Issue Even If a Service

question 14

True/False

(Appendix 4B)Cost allocation is still an issue even if a service department generates some revenues from operating departments.

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Definitions:

Selling Price

The amount for which a product or service is sold to the customer.

Margin Of Safety

The difference between actual sales and breakeven sales, quantifying how much output or sales level can drop before a business incurs a loss.

Variable Expenses

Costs that change in direct proportion to changes in the level of activity or production volume, such as raw material costs.

Break-even Point

The point at which total revenue equals total costs, and no profit is earned or lost, often used to determine the feasibility of a business venture or product.