When determining the cost of a manufactured product, the cost of lighting the factory would be classified as
A) a direct cost.
B) an indirect cost.
C) a period cost.
D) a conversion cost.

Question

Quizplus · Accepted Answer

The cost of lighting the factory is an indirect cost, as it cannot be directly traced to a specific product or production process. It is a cost that is necessary to keep the production facility running, but it is not directly related to the production process itself. Direct costs are those that can be directly traced to the production of a specific product, such as raw materials and labor. Period costs are expenses that are not related to production and are expensed in the period they are incurred. Conversion costs include direct labor and manufacturing overhead costs that are necessary to convert raw materials into finished products.

When Determining the Cost of a Manufactured Product, the Cost