Which of the Following Statements Is Correct

question 48

Multiple Choice

Which of the following statements is correct?

• A) Items such as glue, nails and screws become part of the finished product but are usually classified as factory overhead.
• B) The cost of collecting debts from customers is classified as part of factory overhead.
• C) Power used for factory lighting and heating is classified as a period cost.
• D) Absorption costing splits up factory costs into product and period costs.

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Definitions:

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Percentage Calculation

The mathematical process of finding a percentage, which involves multiplying a value by a percent and dividing by 100.

Average Tax Rate

The ratio of the total amount of taxes paid to the total taxable income, showing the percentage of income that goes to taxes.

Tax Rate

The percentage of a price or taxable amount that is payable as tax.