Question

Effective planning of fixed overhead costs includes​ ________. A. determining which products are to be produced B. choosing the appropriate level of investment in productive assets C. planning​ day-to-day operational decisions D. eliminating​ value-added costs

Answer 1

Answer: B. choosing the appropriate level of investment in productive assets

Explanation: Fixed overhead costs do not change even while the volume of production/business activity changes and are often calculated before the budget period begins, however, there is an additional strategic issue when it comes to planning fixed overhead costs which is the choice of appropriate level of capacity or investment that will benefit the company in the long term. As a result, choosing the appropriate level of investment in productive assets is essential for effective planning of fixed overhead costs as this contributes to ensuring the profitability of the business over time.

Answer 2

Letter B is correct. Choosing the appropriate level of investment in productive assets.

Step-by-step explanation:

Indirect costs can be defined as a set of expenses that an organization has and that are not directly related to the main activity of the company.

Therefore, for there to be an effective planning of fixed indirect costs, it is necessary to have a cost management that chooses the appropriate level of investment in productive assets, since these assets are responsible for generating cash flow and valuing the main capital, which it generates wealth in the long run and allows the management of indirect costs in an effective manner. Some of these productive assets are property rentals, corporate profits, stock dividends, etc.