CIMA BA2 · Chapter 2 · Question 1 of 8
A furniture manufacturer makes dining tables. Which of the following is a DIRECT cost of a table?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The timber used to make the table top and legs
Explanation
A direct cost can be traced specifically to a cost unit. Timber used in each table is direct material. Factory depreciation, supervision and machine oil are incurred for production as a whole and are indirect production costs (production overheads).
More Cost classification and cost behaviour MCQs
- Q3A company's production costs for its lowest and highest activity months were: Lowest: 12,000 units, total cost $74,600 Highest: 20,000…
- Q4Total production costs were $62,000 when 10,000 units were made and $120,400 when 22,000 units were made. Fixed costs increase by $8,000…
- Q5As the level of activity increases within the relevant range, what happens to FIXED cost per unit?
- Q6In a company that uses absorption costing, which of the following would be treated as a PERIOD cost rather than a product cost?
- Q7Which of the following is the main limitation of the high-low method of estimating fixed and variable costs?