Question

Which of the following costs could contain both variable and a fixed cost element with respect to the total output of the company?
a. sales commissions.
b. manufacturing overhead costs.
c. direct material.
d. administrative salaries.

Answer 1

Answer:

b. manufacturing overhead costs.

Explanation:

Manufacturing overhead cost refers to all costs associated with production apart from direct labor or direct materials. They are the indirect costs incurred during the manufacturing process. Manufacturing overhead costs are the production costs that can not be traced directly to the produced items.

Examples of manufacturing overhead costs include depreciation, repairs and maintenance, insurance, and heating costs. Some aspects of the costs, such as depreciation, insurance, rents for the manufacturing space, are fixed costs. They do not vary with production. Other elements of manufacturing costs, such as power, repairs, and utilities, are variable costs.