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.

---

Definitions:

Financial Risk

The possibility of losing financial capital or value, including the risks from market movements, credit risk, liquidity risk, and operational risks faced by investors or companies.

Debt Financing

Raising capital through the sale of bonds, loans, or other notes to individuals or institutions.

Return on Assets

A financial ratio indicating how profitable a company is relative to its total assets.

Weighted Average Cost of Capital

An average representing the expected return on all of a company's securities, weighted according to the proportion each contributes to the total capital structure.