Question

Fixed costs that relate specifically to one center and are incurred for the sole benefit of that center are Entry field with incorrect answer A) indirect fixed costs. B) noncontrollable fixed costs. C) common fixed costs. D) direct fixed costs.

Answer 1

Answer:

D) direct fixed costs.

Explanation:

The fixed cost is that cost which does not change with the change in the production level. It remains constant whether production level changes or not.  

There are various types of fixed costs which are shown below:

1. Indirect fixed cost: The indirect fixed cost is those fixed costs that are not related to the product. Examples: administrative salaries, miscellaneous expenses, etc.

2. Non-controllable fixed costs: These costs are those cost which is not controllable by the business organization such as depreciation, taxes, etc.  

3. Common fixed costs: These costs are those cost which is held for more than one department or segment. Examples - salaries expenses, rent expenses, etc

4. Direct fixed costs: This cost is to deal with the product and specially incurred for the particular segment such as direct material, direct labor, etc.