In CVP Analysis, Total Costs Can Be Separated into a Fixed

question 55

True/False

In CVP analysis, total costs can be separated into a fixed component that does not vary with output and a component that is variable with output level.

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Definitions:

Actual Total Labour Cost

The real expense incurred for labor during the production process, covering all employees directly involved in manufacturing.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity according to standards.

Direct Material Used

The raw materials directly incorporated into a product during the manufacturing process.

Variable Manuf. Overhead

Costs associated with the production process that vary with the level of output, such as utility costs and some labor expenses; it’s a focused subset of variable manufacturing costs.