In Variable Costing,fixed Manufacturing Overhead Is Considered a Period Cost

question 287

Multiple Choice

In variable costing,fixed manufacturing overhead is considered a period cost because ________.

• A) these costs are indirectly related to production
• B) these are not incurred in the period in which the units are produced
• C) these costs are incurred whether or not the company manufactures any goods
• D) these costs are direct costs incurred for production

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Definitions:

Plant Assets

Plant assets, also known as property, plant, and equipment (PP&E), are long-term tangible assets used in the operating activities of a business and are subject to depreciation.

Productive Capabilities

The potential or capacity of a company or a piece of equipment to produce goods or services.

Double-declining-balance

The double-declining-balance method is a form of accelerated depreciation that doubles the normal depreciation rate, reducing the asset's value more quickly in the early years of its life.

Book Value

The book value of an asset is its original purchase cost minus any accumulated depreciation or amortization, reflecting its recorded value on a company's balance sheet.