Planning & EstimatingQuestion 614 of 700
In construction estimating, which BEST describes the difference between fixed and variable overhead?
a.Fixed overhead changes with each job's size, while variable overhead stays constant all year.
b.Both fixed and variable overhead are direct job costs charged to a single project.
c.Fixed overhead is the profit, and variable overhead is the labor burden.
d.Fixed overhead (e.g., office rent, insurance, licenses) continues regardless of how much work you do, while variable overhead rises and falls with the volume of work.
Explanation
Correct: fixed overhead is relatively constant no matter the workload (rent, insurance, base salaries), while variable overhead scales with activity (temporary office help, added equipment). The first option reverses the two behaviors. Overhead is an indirect cost, not a direct job cost, so the second option is wrong. Overhead is not profit and not simply labor burden, so the third option is wrong.
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