Which of the Following Is NOT a Capitalizable Cost on a Self-Constructed

question 92

Multiple Choice

Which of the following is NOT a capitalizable cost on a self-constructed asset?

• A) Total materials used
• B) Total labor costs incurred
• C) Total company overhead
• D) Interest associated with money borrowed to finance the construction project

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Definitions:

Direct Materials

Basic substances that can be directly connected to the making of a product and are vital parts of the finished goods.

Direct Labor

The labor directly involved in the manufacturing of a product, which can be easily traced back to that product.

Fixed Overhead

Refers to the static expenses that occur regardless of the level of production or business activity, such as rent, salaries, and insurance.

Direct Labor

The labor costs directly tied to the production of goods or services, including wages for workers who physically manufacture a product.