If a Cost Can Be Reduced to Zero in the Short

question 27

Multiple Choice

If a cost can be reduced to zero in the short run without significantly harming the organization,the cost is a

• A)variable cost.
• B)committed cost.
• C)discretionary cost.
• D)product cost.

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Definitions:

Raw Material

The basic materials and substances used in the initial stages of production to manufacture goods.

Work in Process

Inventory that includes materials that are currently being processed into finished goods but are not yet complete.

Property, Plant, and Equipment

Long-term tangible assets used in the operation of a business that are expected to be used over several years, including buildings, machinery, and vehicles.

Direct Materials Variances

The difference between the budgeted cost of direct materials and the actual cost incurred.