The Following Information Is Available for Company ZZ: If

question 122

Multiple Choice

The following information is available for Company ZZ: If sales increase to $1,500,000,what is operating income?

• A)$405,000
• B)$500,000
• C)$548,000
• D)$679,000

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Definitions:

Volume Based Cost Drivers

Factors that cause the costs of an activity to increase or decrease with changes in the volume of production or services provided.

Labour Intensive

A process or industry that requires a large amount of manual labor relative to capital or machine usage.

Cost Driver

A factor that causes a change in the cost of an activity, directly affecting the cost of production or operations.

Cost Pool

A grouping of individual costs typically by department or service, from which cost allocations are made to products or services.