Answered: How do you explain the phrase," Fixed…

How do you explain the phrase," Fixed overheads consist of costs which are not subject to change with the change in the volume of productive activity."

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 3DQ: Describe how total fixed costs and unit fixed costs behave with changes in the level of activity.

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How do you explain the phrase," Fixed overheads consist of costs which are
not subject to change with the change in the volume of productive activity."

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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