Which of the Following Is an Example of a Cost

question 36

Multiple Choice

Which of the following is an example of a cost that is variable with respect to the number of units produced?

• A)Rent on the administrative office building.
• B)Rent on the factory building.
• C)Direct labor cost, where the direct labor workforce is adjusted to the actual production of the period.
• D)Salaries of top marketing executives.

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Definitions:

Variable Component

Part of a cost or expense that changes in proportion with the level of activity or volume of output.

Fixed Component

A portion of a cost that does not change with the level of production or sales over the short term.

Overapplied

A scenario in which the overhead costs allocated are higher than the overhead costs that were actually incurred.

Standard Cost System

An accounting method that uses predetermined costs for valuing inventory and recognizes variances between these costs and actual costs.