Question

The fixed costs are also referred to as overhead costs because _________________.

• A. the volume of output produced by a firm does not directly depend upon them
• B. those costs are common to all units of the commodity produced and not special to any one of them
• C. all the units produced by the firm depended directly upon them
• D. none of the above

Answer 1

Answer: (B)

those costs are common to all units of the commodity produced and not special to any one of them

Fixed costs do not directly contribute to the production process and have to paid irrespective of how much output is produced thus they are overhead costs as they are common to all units produced and not special to anyone of them.