Costs That Are Incurred as Part of the Manufacturing Process

question 31

Multiple Choice

Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called:

• A) Administrative expenses.
• B) Nonmanufacturing costs.
• C) Sunk costs.
• D) Factory overhead.
• E) Preproduction costs.

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Definitions:

Business Partnership

A legal form of business operation between two or more individuals who share management and profits.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the central bank.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.

Bond Yield

The return an investor realizes on a bond, calculated as the annual interest payment divided by the bond's current market price.