When Is Direct Labour a Fixed Cost

question 24

Multiple Choice

When is direct labour a fixed cost?

• A) when a company is subject to union contracts and is prohibited from laying off labour
• B) when a company pays employees on a piece-work basis
• C) direct labour is always a variable cost
• D) when a company can hire and lay off its labour quickly

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Definitions:

Foreign Currency

Money or currency of a country other than one's own, used for international trade or investment.

Extraordinary Item

Unusual and infrequent gains or losses that are distinct from the regular operations of a company, reported separately in financial statements.

Income Statement

A financial statement that reports a company's revenues, expenses, and net income over a specific period, showing profitability.

Special Item

Unusual or infrequent gains or losses not classified as extraordinary but significantly important to understand a company's financial health.