Asked by Prince Saini on Jun 22, 2024
Verified
Overhead costs:
A) Are directly related to production.
B) Can be traced to units of product in the same way that direct materials can.
C) Cannot be traced to units of product in the same way that direct labor can.
D) Are period costs.
E) Include only fixed costs.
Overhead Costs
Indirect expenses related to the day-to-day running of a business, such as rent, utilities, and administrative costs, which are not directly tied to production or sales.
Direct Materials
Raw materials that can be directly attributed to the production of goods or services and are an integral part of the finished product.
Fixed Costs
Regular expenses that an entity incurs, which are not affected by changes in business activity levels, such as lease payments and insurance premiums, essential for financial planning.
- Become familiar with the distinct differences across cost types: direct, indirect, product-level, batch-level, unit-level, and facility-level.
- Recognize how overhead costs are allocated using different overhead rate methods: plantwide, departmental, and activity-based.
Verified Answer
Learning Objectives
- Become familiar with the distinct differences across cost types: direct, indirect, product-level, batch-level, unit-level, and facility-level.
- Recognize how overhead costs are allocated using different overhead rate methods: plantwide, departmental, and activity-based.
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