Which of the Following Is a Fixed Cost for an Automobile

question 28

Multiple Choice

Which of the following is a fixed cost for an automobile manufacturing plant?

• A) administrative salaries
• B) electricity used by assembly-line machines
• C) sales commissions
• D) tires

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Definitions:

Direct Method

A method of allocating service department costs directly to production departments without considering inter-service department flows.

Accounts Receivable

Funds that clients or customers owe to a company for products or services provided but for which payment has not yet been received.

Accounts Payable

Money owed by a company to its suppliers or vendors for goods and services received, representing a liability on the balance sheet.

Direct Method

A financial accounting method that allocates service department costs directly to production departments without considering services rendered between service departments.