Select the Appropriate Cost Behavior for the Following Costs Incurred

question 184

Multiple Choice

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer.
-cost of car stereos

• A)variable
• B)fixed

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Definitions:

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with the level of production activity, such as utilities and materials.

Direct Labor-hours

The full amount of labor hours by employees directly contributing to the generation of products or services.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on a standard rate.

Variable Manufacturing Overhead

Costs that vary with the level of production output, such as utilities or raw materials.