Which of These Is Not a Product Cost

question 27

Multiple Choice

Which of these is not a product cost:

• A) factory power.
• B) wages of factory workers.
• C) material used in production.
• D) advertising of a new product.

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Definitions:

Break-even Point

The sales level at which total revenues equate to total costs, resulting in no profit or loss, indicating the minimum sales necessary to cover all expenses.

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent, salaries, and insurance premiums.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit sold contributes to fixed costs and profits.

Break-even Point

The production level at which total revenues equals total expenses, resulting in neither profit nor loss.