Which of the Following Manufacturing Costs Is an Indirect Cost

question 157

Multiple Choice

Which of the following manufacturing costs is an indirect cost of producing a product?

• A) Oil lubricants used for factory machinery
• B) Commissions for sales personnel
• C) Hourly wages of an assembly worker
• D) Memory chips for a microcomputer manufacturer

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Definitions:

Inventory Quantity

The amount of merchandise, raw materials, work-in-progress, and finished goods that a company holds at any given point in time.

Days' Sales

A financial metric that calculates the average time it takes for a company to convert its inventory into sales.

Inventory

The total amount of goods, raw materials, and finished products that a business has on hand at any given time.

Overstated Inventory

A situation where the book value of inventory is recorded higher than its actual physical count or market value, potentially misleading financial statements.