Compared to variable overhead costs planning,fixed overhead costs planning have an additional strategic issue of ________.
A) eliminating activities that do not add value
B) increasing the linearity between total costs and volume of production
C) choosing the appropriate level of investment
D) identifying essential value-adding activities

Question

Quizplus · Accepted Answer

The additional strategic issue of fixed overhead cost planning is choosing the appropriate level of investment. This is because fixed overhead costs are determined by the fixed costs that are necessary to maintain operations, and therefore, any changes in production volume do not significantly affect these costs. Thus, a company needs to carefully assess the level of investment that it is making in fixed costs and ensure that it is in line with production needs and long-term growth plans.

Compared to Variable Overhead Costs Planning,fixed Overhead Costs Planning Have