When forecasting fixed costs, managers should concentrate on total lump-sum costs instead of unitized fixed overhead costs.

Question

Quizplus · Accepted Answer

When forecasting fixed costs, it is important for managers to consider the total lump-sum cost of these fixed costs, as opposed to unitized fixed overhead costs. This is because fixed costs tend to be relatively stable regardless of the level of production, so it is more helpful to consider the overall cost rather than the cost per unit.

When Forecasting Fixed Costs, Managers Should Concentrate on Total Lump-Sum