Question

4.For a profitable company, the amount by which sales can decline before losses occur is known as the:
a. sales volume variance.
b. hurdle rate.
c. marginal income rate.
d. margin of safety.

5.A cost driver is ?

a. the activity that causes indirect cost

b. inefficiencies in production thay causes costs to increase

c.the managerial accountant in charge of recording cost as they flow through the system

d.an accounting technique used to control costs

e.an item to be costed for decision-making purpose

Answer 1

Answers

• Answer #4
  Correct Answer is Option ‘D” Margin of Safety.
  margin of Safety = Total Sales – Break Even sales.
  If Margin of Safety becomes negative, Losses would be incurred.
• Answer #5

A cost driver is Option ‘A’ the activity that causes indirect cost.
For example, cost driver for machining cost can be Machine hours.