February Sales for Ted's Variety Store Equal $100,000, Variable Costs

question 69

Multiple Choice

February sales for Ted's Variety Store equal $100,000, variable costs equal $60,000, fixed costs, including depreciation of $20,000, total $60,000.

• A) Teds' Variety Store broke even with respect to net income.
• B) Teds' Variety Store broke even with respect to cash.
• C) Ted's Variety fell $20,000 short of cash break-even.
• D) Teds' Variety Store broke even with a $20,000 surplus.

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Definitions:

Activity Rate

It is a measure used in activity-based costing to allocate overhead costs to products or services, based on the activities that go into producing them.

Processing Activity

Tasks or operations involved in transforming raw materials into finished goods or services, often part of the production process.

Activity-Based Costing

A costing methodology that assigns expenses to products or services based on the activities that go into their production or delivery.

Machine-Hours

A unit of measure representing the operating time of a machine, used in cost accounting to allocate machine-related overheads to products.