All of the Following Statements Regarding Manufacturing Costs Are True

question 130

Multiple Choice

All of the following statements regarding manufacturing costs are True except:

• A) Direct material costs that increase with production are called variable costs.
• B) The reporting of fixed and variable costs separately is not helpful to managers in analyzing cost behavior.
• C) When overhead costs vary with production, they are called variable costs.
• D) When overhead costs don't vary with production, they are called fixed overhead.
• E) Overhead can be both variable and fixed.

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Definitions:

Retained Earnings

The portion of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business or to pay debt.

Shareholders' Equity

The residual interest in the assets of an entity after deducting liabilities, reflecting ownership value.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Return on Common

A measure of the profitability relative to shareholders' equity, specifically for common stockholders.