Using the Indirect Method,which of the Following Would Not Be

question 83

Multiple Choice

Using the indirect method,which of the following would not be added to net income?

• A)An increase in Equipment.
• B)A decrease in Prepaid Insurance.
• C)An increase in Salaries and Wages Payable.
• D)A decrease in Supplies.

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Definitions:

Cost Driver

A factor that causes a change in the cost of an activity or production process.

Support Department Costs

Expenses incurred by departments that do not directly produce goods but provide essential support services to production departments.

Support Department

An organizational unit that provides the necessary services for the operations departments but does not directly engage in the core activities of the business.

Single Plantwide Rate

A costing method where a single overhead rate is used to allocate all manufacturing overhead costs uniformly across all products, regardless of the department where costs are incurred.