Which of the Following Statements Is True Regarding Fixed and Variable

question 102

Multiple Choice

Which of the following statements is true regarding fixed and variable costs?

• A) Both costs are constant when considered on a total basis.
• B) Variable costs are constant in total, and fixed costs are constant per unit.
• C) Both costs are constant when considered on a per unit basis.
• D) Fixed costs are constant in total, and variable costs are constant per unit.

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Definitions:

Factory Overhead Costs

Refers to indirect manufacturing costs that are not directly tied to a specific product, such as maintenance, utilities, and rent.

Machine Usage

Refers to the operation and utilization of machines in the production of goods or the provision of services, often tracked to optimize efficiency and maintenance.

Service Organization

A company that provides intangible products or services to customers, rather than physical goods.

Multiple Department Overhead Rate

A method where different overhead rates are used for various departments within a company, better reflecting the unique costs associated with each department.