Which of These Is an Example of an Indirect Cost

question 87

Multiple Choice

Which of these is an example of an indirect cost if Department M is the cost object?

• A) Insurance on the organisation's building, part of which is occupied by Department M
• B) Rent on the organisation's building, part of which is occupied by Department M
• C) Commission paid to the sales persons in Department M
• D) A and B

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Definitions:

Net Purchases

The total cost of purchases in a period minus purchase returns, allowances, and discounts.

Cost Of Goods Sold

Direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Weighted Average

A calculation method that takes into account the varying degrees of importance of the numbers in a data set, resulting in a figure that represents the overall effect.