A Common Classification of Costs Is by Business Function

question 135

Multiple Choice

A common classification of costs is by business function. Which of the following classifications is not by business function?

• A) cost object
• B) research and development
• C) distribution
• D) production

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Definitions:

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain level of output, often used to measure workforce productivity.

Variable Overhead Efficiency Variance

A metric that measures the difference between the actual and budgeted variable overhead costs based on the efficiency of production.

Materials Quantity Variance

The difference between the actual and the standard amount of materials used in production, valued at the standard cost.

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost, often used in budgeting and cost management.