X Company Occupies One Site and Consists of Departments, T

question 24

Multiple Choice

X Company occupies one site and consists of Departments, T, S and Y. Which of these is an example of an indirect cost if Department T is the cost object?

• A) Building rental
• B) Salary of Department T manager
• C) Commission of the sales persons for Department T
• D) Stationery costs of Department T

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Definitions:

Variable Cost

Costs that change in proportion to the level of production or sales activity.

Units

Basic measures or quantities of product or service in business operations, often used in contexts such as inventory, production, and sales.

Scatter Diagram

A scatter diagram is a graphical representation used to illustrate the relationship between two quantitative variables, helping in identifying patterns or correlations.

Estimated Line of Cost Behavior

An analysis tool used to predict changes in costs relative to changes in business activities and volume, aiding in budgeting and cost management.