Which of the Following Should Not Be Included in Direct

question 55

Multiple Choice

Which of the following should not be included in direct materials costs?

• A) Materials handling costs.
• B) Materials storage costs.
• C) Incoming freight charges.
• D) Invoice costs of direct materials.
• E) Delivery charges on shipments to customers.

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Definitions:

Allowance Method

An accounting technique used to account for bad debts, which estimates and sets aside a portion of accounts receivable deemed unlikely to be collected.

Uncollectible Receivables

Debts owed to a company that are considered to be uncollectable, indicating that the company does not expect to receive payment due to the debtor's inability to pay.

Percentage of Sales

A financial ratio that compares a particular expense or cost to the total sales revenue, often used to analyze cost behavior or performance.

Note Duration

The total length of time until a note payable or receivable matures and is to be repaid or collected.