ACCA Management Accounting (F2) Certification Practice Exam

To understand why overhead costs are not categorized as a type of cost behavior pattern, we need to clarify the distinctions among the concepts.

Cost behavior patterns relate to how a cost changes with variations in the level of activity or output.

Fixed costs remain constant regardless of the level of production or sales. For instance, rent for a factory remains the same no matter how many units are produced.

Variable costs, on the other hand, change directly with the level of activity. For example, direct materials will increase as more products are manufactured.

Semi-variable costs (also known as mixed costs) contain both fixed and variable elements. They will have a base fixed component that exists regardless of activity level, alongside a variable component that fluctuates based on the level of production.

Overhead costs encompass various costs incurred in the process of manufacturing that cannot be directly traced to specific products, including both fixed and variable components. While overhead costs include fixed costs (like factory rent) and variable costs (like factory supplies), they do not represent a distinct behavior pattern on their own. Instead, they may have fixed and variable costs within them, but they do not solely define how costs behave relative to changes in activity levels.

This differentiation illustrates why overhead costs do not match the specific definitions