Question

1.

The dollar amount from each sale that can contribute to paying fixed costs.

		contribution margin
		break-even point
		margin of safety
		fixed cost ration

2.

If a salesman gets 3% commission on every sale, this would be considered a

		mixed cost
		constant cost
		fixed cost
		Variable cost

3.

If estimated overhead is $200000 and the cost driver is 250 set ups, what would be the activity rate to apply overhead?

		$8000 pre set up
		$800 per set up
		00125 per set up
		$880 per set up

4.

Activity that causes overhead costs to be incurred

		cost driver
		contribution margin
		direct labor
		direct materials

Answer 1

The dollar amount from each sale that can contribute to paying fixed costs

Ans:Contribution Margin

Note:Contribution margin is the the portion of sales revenue that is not consumed by variable costs and so contributes to the coverage of fixed costs.

If a salesman gets 3% commission on every sale, this would be considered a

Ans:Variable cost

Note:If there is no sale, No commission is paid.So Sales Commission is a variable cost

If estimated overhead is $200000 and the cost driver is 250 set ups, what would be the activity rate to apply overhead?

Activity Rate:200000/250

8000

Per Set Up

Activity that causes overhead costs to be incurred

Ans:Cost Driver

cost driver is the factor that causes a change in the cost of an activity.