Fixed Production Costs Are

question 35

Multiple Choice

Fixed production costs are:

• A) directly related to labor costs.
• B) measured as cost per unit of time.
• C) measured as cost per unit of output.
• D) dependent on the amount of goods or services produced.

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Definitions:

Cost Center

A function or department within an organization that does not directly add to profit but still incurs costs, such as HR or customer service departments.

Controllable Margin

A measure of profitability that focuses on the income and expenses directly controlled by a manager or business unit, excluding fixed costs.

Fixed Costs

Expenses that do not change with the level of production or sales activities over a relevant period.

Contribution Margin

The difference between sales revenue and variable costs, indicating the amount contributed towards covering fixed costs and generating profit.