Cobalt Company Management Has Identified the Following Cost Objects: Cost $\begin{array}{llll} &\text { Object } 1&\text { Object } 2&\text { Object } 3\end{array}$

question 160

Multiple Choice

Cobalt Company management has identified the following cost objects: Cost Object 1: The cost of operating the finishing department
Cost Object 2: The cost of operating the factory
Cost Object 3: The cost of a particular product made in June
With respect to these cost objectives, how would rent paid by the finishing department for storage space be classified?
$\begin{array}{llll} &\text { Object } 1&\text { Object } 2&\text { Object } 3\end{array}$
A. $\begin{array}{llll} & \text { Direct } & \text { Direct } && \text { Direct } \\\end{array}$
B. $\begin{array}{llll}& \text { Direct } & \text { Direct } && \text { Indirect } \\\end{array}$
C. $\begin{array}{llll}& \text { Indirect } & \text { Indirect } & \text { Indirect } \\\end{array}$
D. $\begin{array}{llll}&\text { Indireat } & \text { Indireat } & \text {Direct }\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Predetermined Overhead Rate

An estimated charge used to apply manufacturing overhead to individual products or job orders, calculated in advance of the period.

Machine-Hours

A measure of the total run time that a machine is utilized for production over a specific period, often used as a basis for allocating overhead costs.

Direct Labor-Hours

A measure of the total hours worked by employees who are directly involved in the manufacturing process or production of goods.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated before the period begins by dividing estimated overhead costs by an estimated allocation base.