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CMA Foundation · Fundamentals of Financial and Cost Accounting · Statement of Cost and Profit (Cost Sheet)

Which of the following items would normally be EXCLUDED from a cost sheet because it is a financial item and not a cost?

Interest on loans paid to a bank is excluded from the cost sheet. It is a financial charge related to how the business is funded and not to producing or selling goods. Factory depreciation, works manager's salary and carriage outwards are all operating costs and are included.

  1. AInterest on loans paid to a bankCorrect
  2. BDepreciation of factory machinery
  3. CSalary of the works manager
  4. DCarriage outwards

Explanation

A cost sheet includes costs of operations: depreciation of factory machinery is a factory overhead, works manager's salary is a factory overhead, and carriage outwards is a distribution cost. Interest on loans is a financing charge and is excluded from the cost sheet.

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