COST ACCOUNTING
VARIABLE COSTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Costs that do not change with output
|
|
|
Costs that are essential but not directly related to manufacturing
|
|
|
Costs directly involved with making the product
|
|
|
money spent on a regular basis
|
Detailed explanation-1: -Manufacturing overhead costs are called indirect costs because it’s hard to trace them to each product. These costs are applied to the final product based on a pre-determined overhead absorption rate.
Detailed explanation-2: -The cost of raw material and labor required to manufacture a product would be categorized as direct costs. Indirect costs are fixed expenses a business incurs to keep the company running no matter the activity level.
Detailed explanation-3: -Indirect costs are the costs of running a business and going to market with a product or service-regardless of the volume manufactured and/or sold. In other words, they are not directly related to making a product or service, or buying a wholesale product to resell. (This distinguishes them from direct costs.)
Detailed explanation-4: -“Indirect costs” are those that cannot be directly traced to a single cost object. Because they cannot be traced directly to a specific cost object, indirect costs must instead be allocated to all of the products they are used to produce.