simple definition of a semi-fixed and semi-variable cost.

May 12th, 2015
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An overhead cost is an indirect cost. This is cost that cannot be traced directly to a unit of production or sale, or any other cost unit. Overheads include indirect materials costs, indirect labour costs and indirect expenses (for example, factory rental costs, machinery insurance costs, machinery depreciation and so on).

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1. C This is a simple definition of a semi-fixed and semi-variable cost. 2. D Material costs vary with the volume of production. 3. B An overhead cost is an indirect cost. This is cost that cannot be traced directly to a unit of production or sale, or any other cost unit. Overheads include indirect materials costs, indirect labour costs and indirect expenses (for example, factory rental costs, machinery insurance costs, machinery depreciation and so on). 4. BA direct cost is a cost that can be traced directly to a unit of production or sale, or another cost unit. Economically means that the benefit from identifying and tracing the direct cost to the cost unit must be worth the cost and the effort. In practice, this means that low-cost items, particularly low-cost material items, might be treated as indirect costs because the benefit from the greater accuracy from treating them as direct material costs is not worth the cost and the effort. 5. B6. D All four items could be treated as direct materials costs. However, staples are a very low-cost material item, and it would probably not be worth the effort to treat them as direct material costs to gain greater accuracy in costing. Instead, the cost of staple purchases will probably be treated as an overhead expense. (This illustrates the point that a direct cost is expenditure that can be identified with a specific cost unit, but only if it is economical to do so. 7. CA would be a line par

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