Select the Appropriate Classification of the Items Listed Below

question 77

Multiple Choice

Select the appropriate classification of the items listed below.
-Cost of lubricating factory machinery

• A)selling expense
• B)administrative expense
• C)direct materials
• D)direct labor
• E)overhead

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Definitions:

Cost Flow Assumption

An assumption about how costs are removed from inventory and reported as cost of goods sold, influencing how inventory and profits are accounted for.

Variable Costing

An accounting method that only includes variable costs in product costs and treats fixed costs as period expenses.

Fixed Production Costs

Expenses that do not change with the level of production, such as rent for factory premises, salaries of permanent staff, and depreciation of machinery.

Inventory Cost

The total cost associated with acquiring, storing, and managing inventory, including purchase prices, storage costs, and shrinkage.