_____ Should Be Used to Allocate Fixed Costs

question 60

Multiple Choice

_____ should be used to allocate fixed costs.

• A)Actual fraction of capacity used x total budgeted fixed costs
• B)Budgeted fraction of capacity available for use x total budgeted fixed costs
• C)Actual fraction of capacity used x actual fixed costs
• D)Budgeted fraction of capacity available for use x actual fixed costs

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Definitions:

Direct Labor

The labor costs directly traceable to the production of goods or services, such as wages paid to workers or machine operators.

Fixed Overhead

Overhead expenses that remain constant regardless of a company's level of production or sales.

Raw Material

Basic materials used in the production process that are transformed into finished goods through manufacturing.

Fixed Overhead

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance, necessary for maintaining a business’s operations.