If the Contribution Margin on a New Product Line Is

question 38

Multiple Choice

If the contribution margin on a new product line is $15,fixed costs are $165,000,and the total market for the product is 22,000 units,then the breakeven analysis would recommend that the company

• A)abandon the new product line.
• B)decrease the sales price per unit.
• C)increase fixed costs (such as advertising)to lower the breakeven units.
• D)adopt the new product line.

Understand the process of allocating support department costs to production departments prior to product overhead allocation.

Understand the different types of costs in service organizations including upstream, downstream, and production costs.

Recognize the complexity of service costs across different service categories (professional services, service shops, and mass services).

Understand process costing applications and when it applies to service entities.

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Definitions:

Change

The implementation of a program or plan to move the organization or its members to a more satisfactory state.

Diagnosis

The identification of the nature or cause of a particular phenomenon, often used in the context of medical conditions but also applicable to problem-solving in various fields.

Team Building

An effort to increase the effectiveness of work teams by improving interpersonal processes, goal clarification, and role clarification.

Stakeholders

People inside or outside of an organization who have the potential to be affected by organizational decisions.