Easton Company Makes and Sells Scooters Easton Can Currently Purchase the Scooters It Makes from Another

question 84

Multiple Choice

Easton Company makes and sells scooters.Easton incurred the following costs in its most recent fiscal year: $\begin{array}{c}\text { Cost Items Appearing on the Income Statement }\\\begin{array}{|l|l|}\hline\text { Materials cost ( } \$ 10 \text { per unit) } & \text { Depreciation on manufacturing equipment } \\\hline \text { Company president's salary } & \text { Salaries of administrative personnel } \\\hline \text { Labor cost ( } \$ 4 \text { per unit) } & \text { Research and development costs } \\\hline \text { Advertising costs }(150,000 \text { per year) } & \text { Real estate taxes on factory } \\\hline \text { Shipping and handling (\$0.15 per unit) } & \text { Inspection costs } \\\hline\end{array}\end{array}$
Easton can currently purchase the scooters it makes from another company.If the company purchases the scooters,Easton would still continue to use its own logo,sales staff,and advertising programs.Which of the following costs would be classified as a facility-level cost?

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Definitions:

Securities Misrepresentations

Involves providing false or misleading information about a company or its financial vehicles, impacting investors' decisions.

Auditor Liability

The legal responsibility of auditors for the financial reports they certify, especially if misconduct or negligence leads to investor or company losses.

Restatement Test

A principle used in tort law to determine the liability of parties based on the restatement (second or third) of torts, which are influential treatises summarizing the state of tort law.

Accountant Liability

Legal responsibility of an accountant for any negligent or fraudulent accounting practices resulting in financial loss.