When using Activity-Based Costing (ABC) a manufacturing business will have to differentiate between Manufacturing Overhead (MOH) and nonmanufacturing period costs. Which of the following would be considered a nonmanufacturing period cost at the facility-level?
A) Depreciation on factory assets
B) Factory rent
C) Factory utilities
D) Management salaries

Question

Quizplus · Accepted Answer

This question requires differentiation between MOH and nonmanufacturing period costs. Management salaries (Choice D) is the only choice of the four given that would be considered a nonmanufacturing period cost. Factory rent (Choice B), factory utilities (Choice C), and depreciation on factory assets (Choice A) would all be classified as MOH.

When Using Activity-Based Costing (ABC) a Manufacturing Business Will Have