For Planning and Control Purposes, Fixed Overhead Is NOT Included

question 51

Multiple Choice

For planning and control purposes, fixed overhead is NOT included in the standard cost per unit because:

• A)it is incurred based on the number of units produced.
• B)the number of units produced do not vary from period to period.
• C)it can best be controlled on a lump-sum basis.
• D)of all of the above

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Definitions:

Absolute Labor Productivity

The total output produced by a worker or workforce in a given time period, not adjusted for factors like hours worked.

Relative Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen, expressed in terms of the ratio between the cost of the chosen alternative and the cost of the next best alternative.

Opportunity Cost

The cost of forfeiting the next best alternative when one option is chosen over another.

Comparative Advantage

The capability of a company, individual, or country to manufacture a product or offer a service with a reduced opportunity cost than competing entities.