If a Business Had Sales of $4,000,000 and a Margin

question 109

Multiple Choice

If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was

• A) $5,000,000
• B) $3,000,000
• C) $12,000,000
• D) $1,000,000

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Definitions:

Process Cost System

An accounting system used to accumulate costs in industries where a homogeneous product is produced continuously in a mass production environment.

Predetermined Overhead Rate

A rate used to assign manufacturing overhead costs to products or job orders, calculated before the costs are incurred, based on estimated overhead and activity levels.

Machine Hours

A measure of the amount of time a machine is in operation, often used in the calculation of manufacturing costs and overhead allocation.

Job Order Costing System

A job order costing system tracks costs for each individual job or batch of goods produced, assigning specific materials, labor, and overhead costs to each.