Which of the Following Describes the Way Fixed Costs Per

question 177

Multiple Choice

Which of the following describes the way fixed costs per unit behave?

• A) They will remain the same as production levels change.
• B) They will decrease as production decreases.
• C) They will increase as production increases.
• D) They will increase as production decreases.

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, often used as a basis for allocating costs to products.

Machine-Hours

A measure of production time, reflecting the total hours that machinery is operational during a specific period.

Multiple Overhead Rate

The use of more than one overhead rate to allocate a company's indirect costs more accurately than a single overhead rate.

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire plant or factory, applied uniformly to all cost objects.