A Standard Cost Method Is Based on

question 4

Multiple Choice

A standard cost method is based on

• A)variable costs only.
• B)a predetermined average cost per input.
• C)a predetermined average total input cost per unit of output.
• D)either a predetermined average cost per input or a predetermined average total input cost per unit of output.
• E)historical costs.

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Definitions:

Break-even Point

The financial state in which total revenues equal total expenses, and there is no profit or loss.

Variable Cost

Costs that vary directly with the level of production or the volume of services provided.

Fixed Expense

Costs that remain unchanged over a specified period despite variations in business activity levels, such as lease payments or salaries for permanent staff.

Break-even

The point at which total costs and total revenues are equal, meaning no profit or loss is incurred.