Factory Rent and Utilities Are Debited to The

question 24

Multiple Choice

Factory rent and utilities are debited to the:

• A)concerned Work-in-Process Inventory account.
• B)Manufacturing Overhead account.
• C)Finished Goods Inventory account.
• D)Cost of Goods Sold account.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.

Make-Or-Buy Decision

The decision-making process whereby a company evaluates the costs and benefits of manufacturing a product in-house versus purchasing it from an external supplier.

Fixed Overhead

Fixed overhead refers to indirect costs that remain relatively stable regardless of the level of production or sales, such as salaries of administrative personnel and depreciation of buildings.

Variable Overhead

Costs that change in proportion to the level of activity or volume of production in a company.