Costs That Vary in Total in Direct Proportion to Changes

question 79

Multiple Choice

Costs that vary in total in direct proportion to changes in an activity level are called

• A) fixed costs
• B) sunk costs
• C) variable costs
• D) differential costs

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Definitions:

Process Costing System

An accounting method used for homogeneous products, where costs are assigned to processes or departments and averaged over the units produced.

Weighted Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all goods available for sale.

Finished Goods

Items that have been fully produced but are still awaiting sale or distribution to buyers.

Weighted Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all units available for sale during the period.