Earthquakes and Floods Are Examples of "Acts of God

question 10

True/False

Earthquakes and floods are examples of "Acts of God."

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Definitions:

Fixed Costs

Expenses that do not change in total despite fluctuations in production or sales volume, such as rent, insurance, and salaries.

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.

Common Cost

A cost that is incurred to support a number of cost objects but that cannot be traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of all of the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. But no part of the pilot’s wage is caused by any one passenger taking the flight.

Arbitrarily Allocated

The process of distributing amounts in a somewhat random or subjective manner, often used in allocating costs to different departments or projects without a strict formula.