CMA Intermediate · Cost Accounting · Direct Expenses
Under cost accounting classification, which of the following is treated as a direct expense of a specific job?
Hire charges of a special machine taken solely for one job are a direct expense, because the cost arises specifically for that job and can be traced to it. Manager salary, building depreciation and common plant insurance serve many jobs and are overheads.
- AHire charges of a special machine taken on rent solely for executing Job J-47Correct
- BSalary of the factory manager supervising all jobs
- CDepreciation on the common factory building
- DInsurance premium on the plant covering all production departments
Explanation
A direct expense is incurred specifically for a cost unit and can be traced to it economically. Rent of a machine hired only for Job J-47 is traceable to that job. The other items benefit many jobs and are overheads.
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