A Cost That Changes in Proportion to Changes in Volume

question 181

Multiple Choice

A cost that changes in proportion to changes in volume of activity is a(n) :

• A) Differential cost.
• B) Fixed cost.
• C) Incremental cost.
• D) Variable cost.
• E) Product cost.

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Definitions:

Job Cost

A method used in accounting to track the costs associated with a specific job or order, capturing materials, labor, and overhead expenses.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to apply manufacturing overhead to products or job orders.

Direct Labor-hours

The total hours worked by employees who are directly involved in the manufacturing or production process of goods.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated based on estimated costs and activity levels.