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Which of the Following Is a Potential Drawback of Using

question 15

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Which of the following is a potential drawback of using the HRAF?


Definitions:

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remains constant irrespective of the level of production, such as salaries of supervisors and rent for the factory building.

Variable Costing

A costing method that includes only variable production costs (costs that vary with output) in the cost of goods sold and excludes fixed overhead costs.

Variable Costing

A costing method that includes only variable production costs (materials, labor, and variable manufacturing overhead) in product costs, excluding fixed overhead.

Net Operating Income

The company's profit remaining after operating costs are removed, but prior to the deduction of taxes and interest.

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