Indirect Materials Include

question 60

Multiple Choice

Indirect materials include:

• A) materials that are incorporated into the finished product.
• B) materials required for the production process, which do not become an integral part of the finished product.
• C) direct materials that are so insignificant in cost that it becomes unimportant to trace their costs to specific products.
• D) materials required for the production process, which do not become an integral part of the finished product AND direct materials that are so insignificant in cost that it becomes unimportant to trace their costs to specific products.

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Definitions:

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities and resources that go into creating them, aiming for more accurate cost information.

Activity-Based Costing

is a method of accounting that assigns costs to products based on the activities they require, aiming to provide more accurate product costing.

Activity Rate

The activity rate refers to a predetermined overhead rate used in activity-based costing to allocate costs to products or services based on specific activities.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to assign overhead costs to products or job orders based on a relevant activity base such as machine hours or labor hours.