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:

Profit-maximizing Firm

A business entity whose primary goal is to generate the highest possible profit from its operations and investments.

Peak Efficiency

The state of operating at the maximum possible efficiency, where resources are used most effectively and wastage is minimized.

Profits

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Total Profit

Total profit is the financial gain a business achieves after subtracting total costs from total revenue.