A Variable Cost Is a Cost That

question 208

Multiple Choice

A variable cost is a cost that

• A) varies per unit at every level of activity.
• B) occurs at various times during the year.
• C) varies in total in proportion to changes in the level of activity.
• D) may or may not be incurred depending on management's discretion.

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Definitions:

Machine-hours

A measure of the amount of time machines are utilized in the production process.

Overhead Applied

The process of allocating indirect costs to specific cost objects such as products or projects.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products, calculated at the beginning of an accounting period.

Manufacturing Overhead

All indirect costs associated with manufacturing, including equipment maintenance, utilities, and factory management salaries.