Manufacturing Overhead

question 9

Multiple Choice

Manufacturing overhead:

• A) consists of direct material and direct labour costs.
• B) is easily traced to jobs.
• C) should not be assigned to individual jobs because it bears no obvious relationship to them.
• D) is a heterogeneous pool of indirect production costs that can include gas and electricity costs and depreciation.

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Definitions:

Contribution Margin Ratio

A financial metric that represents the portion of sales revenue that is not consumed by variable costs and can contribute to covering fixed costs.

Break-Even Point

The point at which total costs equal total revenue, resulting in no profit but also no loss.

Mixed Costs

Expenses that contain both variable and fixed cost elements, changing in total with the level of activity but not in direct proportion.

Direct Materials

Raw materials that are directly traceable and integral to the finished product in the manufacturing process.