The depreciation on plant equipment, salaries of plant managers and plant leasing costs are considered a _____________?
Correct answer: B. fixed overhead cost
- A. fixed batch cost
- B. fixed overhead cost
- C. variable overhead cost
- D. variable batch cost
Explanation
Plant depreciation, plant-manager salaries and plant leasing costs do not normally change with short-term production volume. They are therefore fixed overhead costs rather than variable overhead or batch 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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