A Responsibility Center in Which the Department Manager Has Responsibility

question 92

True/False

A responsibility center in which the department manager has responsibility for and authority over costs in the department is termed a cost center.

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Definitions:

Direct Labor-Hours

The aggregate amount of time spent by staff members directly participating in the creation process.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to each unit of production, based on an activity driver.

Fixed Manufacturing Overhead

Costs in the manufacturing process that remain constant regardless of the production volume, including equipment depreciation and building lease expenses.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production of goods or services.