Commercial Applications
In element-wise classification of overheads, which one of the following is not included in?
- Fixed overheads
- Indirect labour
- Indirect materials
- Indirect expenditure
Answer
Fixed overheads
Reason — Element-wise classification of overheads includes (a) indirect material, (b) indirect labour, and (c) indirect expenses. "Fixed overheads" is a classification on the basis of behaviour (along with variable overheads and semi-variable overheads), not on the basis of element. Therefore, fixed overheads do not belong to the element-wise classification.
Related Questions
A typical factory overhead cost is ……………
- Audit
- Compensation of plant manager
- Design distribution
- Internal
The cost of raw materials used in production is considered an indirect cost.
- True
- False
Match the following types of costs with their correct examples:
Types of Cost Examples (a) Direct Material 1. Wages paid to quality inspectors (b) Indirect Labour 2. Cloth used in dress making (c) Indirect Material 3. Nails used in carpentry work (d) Direct Labour 4. Salary of a factory manager - a-2, b-4, c-3, d-1
- a-3, b-1, c-2, d-4
- a-4, b-3, c-2, d-1
- a-1, b-2, c-3, d-4
Fixed cost per unit decreases when ……………
- Production volume increases
- Production volume decreases
- Variable cost per unit decreases
- Variable cost per unit increases