Costs Included in Assets
Eritrea Ltd Instructions
Which of These Costs Should Be Included in the Due

question 92

Essay

Costs included in assets
Eritrea Ltd. is expanding its operations. Due to the expansion, they incurred the following costs during the fiscal period when they constructed a new factory:

$\begin{array}{llcc} \text { Direct labour } & 70,000 \\ \text {Loan interest to finance expansion. } &3,000\\ \text {Architectural drawings } &15,000\\ \text { Purchase of company car for the new plant manager.} &44,000\\ \text { Direct material for factory } &81,000\\ \text { Allocation of overhead based on labour } &\\ \text { hours worked on factory } &58,000\\ \text { Imputed interest on lost opportunity costs} &9,000\\\end{array}$

Instructions
Which of these costs should be included in the cost of the new factory?

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Definitions:

Edmonton Police Service

A municipal police force in Edmonton, Alberta, Canada, responsible for maintaining public safety and enforcing laws.

Strategic Plan

A document outlining an organization's direction, priorities, and actions to achieve its goals.

Productivity Growth

An increase in the efficiency of production, often measured by the ratio of output to input over a specified period of time.

Economies Of Scale

The cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale.