Costs that relate specifically to one center and are incurred for the sole benefit of that center are
A) common fixed costs.
B) direct fixed costs.
C) indirect fixed costs.
D) noncontrollable fixed costs.

Question

Quizplus · Accepted Answer

Direct fixed costs are costs that can be traced specifically to one center and are incurred solely for the benefit of that center. Common fixed costs (A) are costs that are shared by multiple centers and cannot be directly traced to one center. Indirect fixed costs (C) cannot be specifically traced to one center, but are incurred for the benefit of multiple centers. Noncontrollable fixed costs (D) are fixed costs that cannot be controlled at the center level, but are determined by higher levels of the organization.

Costs That Relate Specifically to One Center and Are Incurred