Which of the Following Is True of Indirect Costs

question 119

Multiple Choice

Which of the following is true of indirect costs?

• A) Indirect costs are always considered sunk costs.
• B) All indirect costs are included in cost of goods sold.
• C) Indirect costs always vary in direct proportion to the level of production.
• D) Indirect costs cannot be traced to a particular cost object in an economically feasible way.

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Definitions:

Preferred Shares

Preferred shares represent a class of ownership in a corporation with a fixed dividend and priority over common shares in asset liquidation.

Cost of Equity

The return that investors require for investing in a company's equity, representing the compensation for taking on equity risk.

Capital Structure

The specific blend of equity and debt that a company employs to fund its general activities and expansion.

Market Risk Premium

Refers to the extra expected return that investors demand for choosing to invest in the stock market over risk-free securities.