Peter Newton,a Production Supervisor at BeThink,Inc

question 14

Multiple Choice

Peter Newton,a production supervisor at BeThink,Inc. ,uses variable costing for any cost control decisions that he has to make.Which of the following is the reason for his choice?

• A)Fixed costs are not relevant in the long run.
• B)Only variable costs are controllable in the long and short run.
• C)Absorption costing is not relevant for long-run decisions.
• D)Lower management usually does not have control over most fixed costs.

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Definitions:

Direct Labor

Labor costs that are directly attributed to the production of goods, including wages for workers who manufacture a product or perform a service.

Gross Profit

The difference between sales and the cost of goods sold, representing the profit from trading activities before deduction of overheads and other selling expenses.

First Quarter

This term refers to the first three months of a financial year; specifically, January, February, and March, used in fiscal and calendar year reporting.

Service Provider

A company or organization that offers services to others, such as telecommunications, utilities, or healthcare.