COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the cost of sales commissions
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property taxes paid on plant facilities
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energy costs
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indirect materials
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Detailed explanation-1: -Fixed Overhead Costs-These are costs that remain the same regardless of production or sales volume. Examples include rent, insurance, and administrative salaries. Variable Overhead Costs-These are costs that vary with production or sales volume. Examples include utility bills, materials, and labor costs.
Detailed explanation-2: -Overhead Costs – Types Typically, there is no volatility in the overhead with increases or decreases in the production of a given product. Thus, it is considered to be a fixed cost. Common fixed costs include salaries for supervisors, managers, and administrative staff, rent for buildings, and tax liabilities.
Detailed explanation-3: -Usually manufacturing overhead costs include depreciation of equipment, salary and wages paid to factory personnel and electricity used to operate the equipment.
Detailed explanation-4: -Wages paid to workers however can vary as the number of workers increase or decrease. Hence it is not considered as a fixed cost.