Which item is normally included in the product cost of manufactured goods?
Correct answer: A. Direct materials consumed in production
- A. Direct materials consumed in production
- B. Advertising expense for the finished product
- C. The managing director's office rent
- D. Interest paid on a bank loan
Explanation
Direct materials are a manufacturing cost and become part of product cost until the goods are sold. Administrative, selling and financing expenses are normally period costs rather than product costs.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
Practise Cost Accounting
941 free Cost Accounting MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Cost Accounting questions
A factory estimates overhead of Rs. 600,000 and 30,000 direct labour hours for the coming period. What predetermined overhead rate should it use per direct labour hour?
A product sells for Rs. 80 per unit and has a variable cost of Rs. 50 per unit. What is its contribution margin ratio?
A product sells for Rs. 50 per unit, has a variable cost of Rs. 30 per unit, and total fixed costs are Rs. 120,000. What is the break-even output?
Under marginal costing, which cost is generally excluded from the inventory valuation of finished goods?
A company has fixed costs of Rs. 90,000 and a contribution margin ratio of 30 percent. What sales revenue is required to break even?
Which combination represents prime cost in cost accounting?