Most of the decisions determining the level of fixed overhead costs to be incurred will be made ________.
A) by the end of a budget period
B) by the middle of a budget period
C) on a day-to-day ongoing basis
D) at the start of a budget period

Question

Quizplus · Accepted Answer

The level of fixed overhead costs is determined at the start of a budget period through the budgeting process, where management determines the expected level of activity and the associated fixed costs. Once the budget period begins, the level of fixed overhead costs will generally remain constant, as they are not affected by changes in activity levels. Therefore, most of the decisions regarding fixed overhead costs will be made at the start of the budget period.

Most of the Decisions Determining the Level of Fixed Overhead