As the Cost Driver Activity Level Decreases Within the Relevant

question 156

Multiple Choice

As the cost driver activity level decreases within the relevant range _____.

• A)total fixed costs increase
• B)fixed costs per unit decrease
• C)total variable costs decrease
• D)variable costs per unit decrease

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Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to products.

Machine-Hours

A measure of production time, referring to the total number of hours machines are operated during a specific period.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries for production managers.

Overapplied Overhead

An instance where the designated cost for manufacturing overhead surpasses the real overhead costs experienced.