ACCA Applied Knowledge · Business and Technology · Financial information provided by business
In a furniture company, the cost of timber that can be traced directly to each table made is classified as which of the following?
Timber traceable to each table is a direct material cost and forms part of prime cost. Because it can be identified with the specific product and normally varies with units made, it is not an overhead and not a fixed cost.
- AIndirect production overhead
- BDirect material cost, which is a prime costCorrect
- CAdministration overhead
- DFixed cost by nature
Explanation
Timber identifiable with each table is a direct material. Direct materials, direct labour and direct expenses together form prime cost. It is not overhead because it can be traced to the product, and it normally varies with output rather than being fixed.
Did you get it right without looking?
One question tells you little. A timed set on Financial information provided by business shows your real accuracy, how long you take and where you lose marks.
More Financial information provided by business questions
- Which of the following is an item of 'other comprehensive income' rather than part of profit or loss?
- Which of the following is a direct cost of producing a batch of wooden tables?
- A company's management accountant uses a report that combines sales figures from a regional spreadsheet with figures from the central accoun…
- Brindle Co's management accountant produces a report showing profit by customer segment, forecasts for next quarter and the percentage of de…
- Which of the following would be classified as a current liability in a company's statement of financial position at 31 December?
- Which of the following is an example of financial information used primarily for stewardship and accountability to shareholders rather than …