Nonmanufacturing Costs Are Generally Classified into Two Categories: Selling and Administrative

question 184

True/False

Nonmanufacturing costs are generally classified into two categories: selling and administrative.

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Definitions:

Mixed Cost

A cost containing both variable and fixed cost elements, changing in total with activity level but not proportionately.

Direct Labor Hours

The total time workers spend producing a product or providing a service, directly tied to the production process.

Contribution Margin Ratio

A financial metric that shows what percentage of sales revenue is available to cover fixed costs and generate profit after variable costs have been paid.

Variable Costs

Costs that change in proportion to the level of activity or volume of goods produced by a business.