All of the Following Costs Should Be Charged Against Revenue

question 159

Multiple Choice

All of the following costs should be charged against revenue in the period in which costs are incurred except for

• A) manufacturing overhead costs for a product manufactured and sold in the same accounting period.
• B) costs which will not benefit any future period.
• C) costs from idle manufacturing capacity resulting from an unexpected plant shutdown.
• D) costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory.

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Definitions:

Variable Overhead

Costs that fluctuate with the level of production output, including expenses like utilities and raw materials.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product.

Direct Labor-Hours

The total hours of work directly involved in manufacturing goods or providing a service.

Variable Overhead

The costs that fluctuate with the level of production output and may include expenses such as utilities and indirect materials.