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CMA Intermediate · Cost Accounting · Introduction to Cost Accounting

Which of the following is correctly classified as a direct expense of a specific job in a printing firm?

Royalty paid per unit printed is a direct expense because it can be traced to the specific units or job. Factory rent, the works manager's salary and building depreciation benefit all jobs together, so they are classified as factory overheads.

  1. AFactory rent
  2. BRoyalty paid per unit printed for a licensed designCorrect
  3. CSalary of the works manager
  4. DDepreciation of the factory building

Explanation

Direct expenses are costs other than material and labour that can be traced to a specific cost unit. A per-unit royalty is traceable to the units printed. Factory rent, works manager salary and building depreciation are common to all jobs and are overheads.

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