All of Jill Enterprise's Operations Are Housed in One Building

question 16

Multiple Choice

All of Jill Enterprise's operations are housed in one building with the costs of occupying the building accumulated in a separate account. The total costs incurred in May amounted to £24,000. The company allocates these costs on the basis of square feet of floor space occupied. Administrative offices, sales offices, and factory operations occupy 9,000, 6,000, and 30,000 square feet, respectively. How much will be classified as a product cost for May?

• A)£4,800
• B)£3,200
• C)£16,000
• D)£24,000

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Definitions:

Collateral

Assets pledged by a borrower to secure a loan or other credit, which the lender can seize if the borrower defaults.

PMSI

Purchase Money Security Interest, a legal claim that allows a lender to repossess or foreclose on property if the borrower defaults, specifically when the loan was used to purchase the property.

Priority Rule

A principle in law that determines the precedence of claims, rights, or interests in order to resolve conflicts between parties.

Inventory

The total amount of goods and materials held in stock by a business, intended for sale or production purposes.