1. The key argument in favor of direct costing (and against absorption costing) is that fixed manufacturing overhead costs like "depreciation--factory machinery" and "rent-- factory building" should be treated as period costs. What is the reason behind this?

A. Fixed manufacturing overhead costs occur regardless of the level of production and are a function of time.

B. Fixed manufacturing overhead costs are generally immaterial in amount.

C. Fixed manufacturing overhead (like direct materials, direct labor, and variable manufacturing overhead) is necessary in order to make a product. That is, you cannot make a product without direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead.

D. Fixed manufacturing costs change as production changes.

2. 

What does the word utility mean?

A$.$

Ability of capacity of a good or service to be used in the manufacturing of a product

B$.$

Lack of capability a good or service might have to be used in the manufacturing of a product

C$.$

Ability or capacity of a good or service to be useful and give satisfaction to someone

D$.$

Lack of capability a good or service might have to be useful and give satisfaction to someone