Which of These Is an Indirect Cost If the Cost

question 42

Multiple Choice

Which of these is an indirect cost if the cost object is the servicing department of a motor vehicle dealership?

• A) Rental of full site of business premises.
• B) Wages of servicing mechanics.
• C) Maintenance of servicing machinery.
• D) Spare parts for the servicing of vehicles.

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Definitions:

Period Cost

Costs that are not directly tied to the production process and are expensed in the period in which they are incurred.

Plastic Parts

Components or materials made out of plastic, often used in manufacturing and production of various goods.

Direct Materials

Essential parts that directly contribute to the fabrication of particular merchandise or services.

Product Cost

The total amount incurred to manufacture a product, including direct materials, labor, and overhead expenses.