In Using the Product Cost Concept of Applying the Cost-Plus

question 46

True/False

In using the product cost concept of applying the cost-plus approach to product pricing, selling expenses, administrative expenses, and profit are covered in the markup.

---

Definitions:

Machine-Hours

An indicator reflecting the duration of machinery utilization during the manufacturing process, commonly employed in the distribution of manufacturing overhead expenses.

Manufacturing Overhead

Represents indirect costs involved in producing goods, including maintenance expenses, quality control, and equipment depreciation.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that vary directly with production volume, such as supplies and indirect labor.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as rent, property taxes, and salaries of permanent employees.