A Basic Tenet of Variable Costing Is That Fixed Manufacturing

question 255

Multiple Choice

A basic tenet of variable costing is that fixed manufacturing overhead costs be currently expensed. What is the rationale behind this?

• A)Fixed manufacturing overhead costs are generally immaterial in amount.
• B)Fixed manufacturing overhead costs occur regardless of level of production.
• C)Allocation of fixed manufacturing costs are arbitrary at best.
• D)Fixed manufacturing costs change as production changes.

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Definitions:

Batch Processing

A processing method where data or transactions are accumulated over a period and processed as a single group.

OLAP

Online Analytical Processing, a category of software tools that provides analysis of data stored in a database, enabling complex calculations, trend analysis, and data modeling.

Source Data Processing

The handling or manipulation of raw data to prepare it for further analysis, including validation, sorting, reduction, and transformation.

MRP II

Stands for Manufacturing Resource Planning, an evolution of Material Requirements Planning (MRP) that integrates additional data, such as employee and financial needs, to support manufacturing processes.