Which of the Following Cost Items Is Not Allocable as Joint

question 45

Multiple Choice

Which of the following cost items is not allocable as joint costs when a single manufacturing process produces several main products and several by-products?

• A) Direct materials.
• B) Variable overhead.
• C) Direct labor.
• D) Freight-out.

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Definitions:

Unit Product Cost

The total cost to produce one unit of product, including direct materials, direct labor, and a portion of all overhead costs.

Variable Costing

A system in accounting that considers solely the changing costs associated with production (direct materials, direct labor, and variable manufacturing overhead) in the calculation of product prices.

Net Operating Income

Net Operating Income, often abbreviated as NOI, is a financial metric that calculates a company’s profit after subtracting operating expenses excluding taxes and interest.

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.