Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 6 - Variable Costing and Segment Reporting: Tools for Management - Questions - Page 259: 6-5

Answer

Fixed manufacturing costs are seen as being capacity costs. This means that they are highly influenced by the amount which is produced. Because of that, if there are no units produced, fixed manufacturing costs will still be incurred.

Work Step by Step

Fixed manufacturing costs are seen as being capacity costs. This means that they are highly influenced by the amount which is produced. Because of that, if there are no units produced, fixed manufacturing costs will still be incurred.
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