Which of the Following Would Be an Example of a Fixed

question 179

Multiple Choice

Which of the following would be an example of a fixed cost?

• A) wages for an assembly line worker
• B) electric bill
• C) depreciation on equipment
• D) materials used

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Definitions:

Markup

The amount added to the cost of goods to cover overhead and profit; a percentage of cost.

Direct Labor

Labor costs directly associated with the manufacture of specific goods or the delivery of specific services, representing wage expenses for personnel involved in production.

Absorption Costing

An accounting strategy where the price of manufacturing a product is determined by adding up expenses on direct materials, direct labor, and every overhead cost, be it variable or fixed.

Markup

The extra charge applied to the acquisition cost of items intended to offset operating costs and secure a profit, which defines their market price.