Which of These Is an Example of an Indirect Cost

question 87

Multiple Choice

Which of these is an example of an indirect cost if Department M is the cost object?

• A) Insurance on the organisation's building, part of which is occupied by Department M
• B) Rent on the organisation's building, part of which is occupied by Department M
• C) Commission paid to the sales persons in Department M
• D) A and B

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Definitions:

ATC

Average Total Cost, the sum of all costs divided by the quantity of output produced, a key concept in economics for understanding profitability at different production levels.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing full industry adjustment.

Output

The overall output of products or services from a business, industry, or national economy.

ATC Curve

Refers to the Average Total Cost curve in economics, which depicts how the total costs per unit of output change as the level of production is altered.