In a Manufacturing Company, the Cost of Direct Labour Treated

question 115

Multiple Choice

In a manufacturing company, the cost of direct labour treated as an expense when

• A)products are sold.
• B)products are transferred into work in process inventory.
• C)wages are paid to the employees.
• D)at month end with accruals for wages.

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Definitions:

Absorption Costing

A calculation technique in which the cost of a product is determined by including all costs associated with manufacturing, including direct materials, direct labor, as well as variable and fixed overhead costs.

Cost-plus Pricing

A pricing strategy where a fixed percentage is added to the total cost of producing a product to determine its selling price.

Return on Investment

A measure of performance that evaluates the efficiency or profitability of an investment relative to its cost.

Selling Price

The amount of money a buyer pays to purchase a product or service.