For planning and control purposes, fixed overhead is not included in the standard cost per unit because:
A) It is incurred based on the number of units produced.
B) The number of units produced does not vary from period to period.
C) It can best be controlled on a lump-sum basis.
D) It is a fixed cost for more than one item.

Question

Quizplus · Accepted Answer

By definition, the quantity of goods and services purchased by fixed expenditures is not expected to change in proportion to short run changes in the level of production. It is not a cost incurred on a unit by unit basis, but a cost incurred for a specific time period for a relevant range of production.

For Planning and Control Purposes, Fixed Overhead Is Not Included