Fixed Costs: I

question 68

Multiple Choice

Fixed costs: I. are variable over long periods of time.
II) must be paid even if production is halted.
III) are generally affected by the amount of fixed assets owned by a firm.
IV) per unit remain constant over a given range of production output.

• A) I and III only
• B) II and IV only
• C) I, II, and III only
• D) I, II, and IV only
• E) I, II, III, and IV

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Definitions:

Overhead Controllable Variance

The difference between actual overhead expenses incurred and the budgeted or expected overhead costs that can be managed or controlled.

Standard Hours Allowed

The predetermined amount of time expected to be taken to complete a specific task or job under normal conditions.

Overhead Volume Variance

The difference between the budgeted overhead cost and the applied overhead cost based on actual activity levels.

Labor Price Variance

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