CIMA BA3 · Chapter 11 · Question 11 of 12
In a manufacturing business, where is depreciation of factory machinery shown?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) As a factory overhead in the manufacturing account
Explanation
Depreciation of factory machinery is an indirect production cost, so it is a factory overhead added to prime cost in the manufacturing account. It is not traceable to particular units, so it is not a direct expense. Depreciation of office equipment would be an administrative expense.
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