Process Cost Systems Are Used to Apply Costs to a Specific

question 97

True/False

Process cost systems are used to apply costs to a specific job such as the manufacturing of a specialized machine.

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Definitions:

Variable Manufacturing Overhead

Costs that vary with production volume, such as utilities and materials, which are only incurred as a result of manufacturing activities.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services.

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing to covering fixed costs and generating profit.

Variable Production Costs

Costs that vary directly with the level of production output, such as raw materials and direct labor.