Which of the following production costs, if expressed on a per unit basis, would be most likely to change significantly as the p

Question

3 years ago

14

Which of the following production costs, if expressed on a per unit basis, would be most likely to change significantly as the p

roduction level varies?
A. Direct materials.
B. Direct labor.
C. Fixed manufacturing overhead.
D. Responses A and B are both correct.

Business

1 answer:

Temka [501] · Answer 1 · 2022-07-10T11:38:28+03:00

Answer:

The answer is Option D.

Explanation:

The answer is Option D.

The direct costs (materials and labor) will change if the production level varies. They are defined as the costs that are strictily related with the production of the product or service.

The fixed manufacturing overhead will vary independently of the variations of the production level. This is an example of indirect cost.