Consider the Following Statements About Support Department Costs

question 29

Multiple Choice

Consider the following statements about support department costs.
i. In order to assign all manufacturing costs to products, support department costs must be allocated to production departments.
ii. Support department costs are period costs rather than product costs because the support departments are not directly involved in production.
iii. Support departments are not considered crucial to the production process.
Which statement/s is/are correct?

• A) i, ii and iii
• B) i and iii
• C) iii
• D) i

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Definitions:

Relevant Range

The span of activity levels within which the assumptions about fixed and variable cost behaviors hold true, crucial for accurate budgeting and planning.

Variable Cost

A cost that varies directly with the level of production or business activity, such as materials and labor directly involved in production.

Overhead Costs

Indirect costs not directly attributed to the production of goods or services, such as rent, utilities, and administrative expenses.

Machine Setups

The process of configuring or preparing machinery for a particular job, task, or production run.