An Example of a Discretionary Cost for a Firm That

question 79

Multiple Choice

An example of a discretionary cost for a firm that manufactures furniture is:

• A) direct material.
• B) advertising.
• C) labour.
• D) glue and nails.

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Definitions:

Departmental Overhead Method

A technique in accounting used to allocate overhead costs to specific departments based on relevant allocation bases such as direct labor hours or machine hours.

Volume-related Measures

Quantitative assessments related to the amount or size of something, especially used in the context of production and sales.

Overhead Costing Accuracy

The degree to which allocated overhead costs accurately represent the actual expenses incurred by the production process or specific products.

Plantwide Overhead Rate

An overhead allocation rate used throughout an entire plant or company to allocate indirect costs to products.