Asked by Austin Bogle on May 07, 2024
Verified
Factory equipment depreciation
A) Direct costs
B) Indirect costs
C) Neither direct nor indirect costs
Factory Equipment Depreciation
This is the process of allocating the cost of factory equipment over its useful life, thereby reducing its value due to wear and tear, or obsolescence.
Direct Costs
Expenses that can be directly tied to the production of specific goods or services, such as raw materials and labor.
Indirect Costs
Expenses not directly related to the production of goods or services but necessary for operations, such as utilities or administration.
- Learn to recognize and allocate costs as direct or indirect.
- Distinguish between direct materials, direct labor, and factory overhead in manufacturing costs.
Verified Answer
LO
Larose OlshoppeMay 08, 2024
Final Answer :
B
Explanation :
Factory equipment depreciation is considered an indirect cost because it cannot be directly traced to a specific product or cost object. Instead, it is a general cost related to the overall operation of the factory and is allocated across all products.
Learning Objectives
- Learn to recognize and allocate costs as direct or indirect.
- Distinguish between direct materials, direct labor, and factory overhead in manufacturing costs.