Suppose Sam's Shoe Co

question 126

Multiple Choice

Suppose Sam's Shoe Co.makes one kind of shoe.An example of a fixed cost for this company would be:

• A) the lease for the factory building.
• B) the leather needed to make the shoes.
• C) the needles for the sewing machines that need to be replaced after sewing every 1,000 pairs.
• D) All of these are examples of fixed costs.

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Definitions:

Job-Order Costing System

An accounting system that assigns costs to specific jobs or batches of goods, typically used in manufacturing or service industries where each job is unique.

Direct Labor-Hours

A measurement of the time workers spend directly manufacturing a product, often used to allocate manufacturing overhead.

Fixed Manufacturing Overhead Cost

Overhead costs related to manufacturing that remain constant regardless of the level of production, such as factory rent and salaries of supervisors.

Variable Manufacturing Overhead

Costs in manufacturing that change with the level of production output, like utilities or raw materials.