The budgeted fixed manufacturing cost for per unit, which is used to measure per unit cost of supplying is called ___________?
Correct answer: B. capacity
- A. indirect labor
- B. capacity
- C. raw material
- D. direct labor
Explanation
The capacity cost rate expresses budgeted fixed manufacturing cost per unit of capacity supplied, making capacity the relevant concept. Indirect labor and direct labor are cost components, not the rate itself.
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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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