Fixed overhead costs: A. never have any unused capacity B. should be unitized for planning purposes C. are unaffected by the degree of operating efficiency in a given budget period D. Both A and B are correct.

Question

Cindy Valenzuela

Business

23 June, 15:27

Fixed overhead costs: A. never have any unused capacity B. should be unitized for planning purposes C. are unaffected by the degree of operating efficiency in a given budget period D. Both A and B are correct.

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Answers (1)

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Kamren Marshall · Answer 1

C. are unaffected by the degree of operating efficiency in a given budget period.

Explanation:

Fixed over head costs or indirect costs are cost that do not vary with the level of out put. They are essential cost required to manage a business.

These costs are the same months by Months and are needed for the smooth running of the business. They are also unaffected by the degree of operating efficiency in a given budget period.

Examples of fixed overhead are rents, salaries, depreciation, insurance and taxes. It should however be noted that if there is an increase in sales compared to the budgeted sales of the company, there could be an increase in fixed overhead cost due to additional employees and administrative staff.