Costs That Change Abruptly at Different Levels of Activity Because

question 25

Multiple Choice

Costs that change abruptly at different levels of activity because the resources and their costs come in indivisible chunks are called ________.

• A)mixed costs
• B)variable costs
• C)fixed costs
• D)step costs

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Definitions:

Direct Labor Hours

Direct labor hours represent the total hours worked by employees directly involved in producing goods or providing services in a manufacturing or service setting.

Overhead Costs

Expenses related to the operation of a business that cannot be directly tied to a specific product or service.

Plantwide Overhead Rate

Plantwide overhead rate is a single rate used to allocate all of a plant’s manufacturing overhead costs to its production activities, regardless of the department in which they occur.

Direct Labor Hour

A measure of the labor directly involved in manufacturing a product or delivering a service, often used in costing and budgeting.