CMA Intermediate · Cost Accounting · Direct Expenses
Under cost accounting, which of the following is correctly classified as a direct expense of a specific job?
Royalty paid per unit produced under a licence is a direct expense because it varies with output and is traceable to the specific product. Factory rent, factory manager salary and general lighting depreciation serve many products and are treated as overheads, not direct expenses.
- ARoyalty paid per unit produced under a licence for that productCorrect
- BRent of the factory building
- CSalary of the factory manager
- DDepreciation of general factory lighting
Explanation
A direct expense is incurred specifically for a cost object and can be traced to it economically. Royalty on units produced is traceable to the product. Factory rent, manager salary and general lighting depreciation benefit all products and are overheads.
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