Which Cost Is a Fixed Cost for the First Year

question 20

Multiple Choice

Which cost is a fixed cost for the first year of production?

• A) the cost of plastic that increases as the price of oil increases
• B) the cost of electrical utilities each month
• C) the cost of part-time workers during peak production season
• D) property taxes for a storage facility

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Definitions:

Service Organization

A company that provides intangible products or services to customers, rather than physical goods.

Multiple Department Overhead Rate

A method where different overhead rates are used for various departments within a company, better reflecting the unique costs associated with each department.

ABC

Activity-Based Costing, an accounting method that assigns costs to products based on the activities involved in their production.

Selling and Administrative Expenses

Selling and Administrative Expenses encompass all the indirect costs associated with running a business, including sales team costs, marketing, management salaries, utilities, and office supplies.