A Subtotal Used in Evaluating the Performance of a Responsibility

question 68

Multiple Choice

A subtotal used in evaluating the performance of a responsibility center manager, as distinct from the performance of the center, is:

• A) Contribution margin, less traceable fixed costs.
• B) Sales, less committed costs.
• C) Contribution margin, plus fixed costs deferred into inventory.
• D) Contribution margin, less controllable fixed costs.

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Definitions:

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and economic agents have fully adjusted to any economic changes.

Perfect Competition

A market structure characterized by a large number of buyers and sellers, freely entering or exiting the market, selling identical products.

Average Total Cost

The total cost of production divided by the quantity produced, encompassing both fixed and variable costs.

Excess Capacity

The situation where a firm or economy can produce more goods or services than currently demanded, often leading to underutilization of resources.