ACCA MA · Chapter 3 · Question 1 of 10
For a furniture manufacturer, which of the following is a direct cost?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Timber used to make tables
Explanation
A direct cost can be traced in full to a specific cost unit. The timber in each table can be identified with that table. Factory rent, supervisor salaries and machinery depreciation are shared across all products, so they are indirect costs (production overheads).
More Cost classification and cost behaviour MCQs
- Q3A telephone bill consists of a fixed monthly line rental plus a charge for each call made. How would this cost be classified?
- Q4A factory needs one supervisor for every 12 production workers. As the workforce grows, how would supervisor salaries be classified?
- Q5A company recorded the following total costs: 4,000 units: $46,000 5,500 units: $53,900 7,000 units: $61,000 Using the high-low method…
- Q6Fixed costs increase by $10,000 when activity goes above 6,000 units. Total costs were $38,000 at 3,000 units and $90,000 at 9,000 units…
- Q7As the level of activity increases within the relevant range, what happens to fixed cost per unit?