In production volume variance, an acquiring fixed cost such as equipment and plant lease is known as ____________?
Correct answer: C. lump sum fixed cost
- A. lump sum price amount
- B. lump sum variable cost
- C. lump sum fixed cost
- D. lump sum manufacturing costAccounting & Auditing
Explanation
Equipment and plant lease costs do not change with short-term production activity, so they are fixed costs. Because they are incurred as a single overall amount, they are described here as lump-sum fixed costs.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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