An Example of a fiXed Cost of Producing a Good

question 1

Multiple Choice

An example of a fixed cost of producing a good is the _____.

• A) cost of transporting the finished goods
• B) rent paid for the office building
• C) cost of raw materials
• D) wage paid to part-time workers

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Definitions:

Manufacturing Overhead Budget

An estimate of the total costs associated with the indirect production activities, excluding direct materials and direct labor, for a certain period.

Direct Labor-Hour

A measurement unit for the amount of work or labor force contribution directly involved in manufacturing a product, typically expressed in hours.

Predetermined Overhead Rate

An estimated overhead rate calculated before the accounting period begins, used to allocate overhead costs to products or services.

Direct Labor-Hour

A measure of the work done by laborers who are directly involved in the manufacturing process, calculated in hours.