Statement 1: Manufacturing overhead is an indirect cost with respect to units of product. Statement 2: Depreciation on office equipment would be included in the cost of goods manufactured. Statement 3: Rent on factory building used in the production process would be classified as a period cost and as a fixed cost. Statement 4: The amount that a manufacturing company could earn by renting out unused portion of its warehouse is an example of an opportunity cost. Statement 5: Internal failure costs result from identification of defects during the appraisal process such as scrap, rejected products, rework and downtime. a. All statements are true b. Statements 1, 3 and 5 c.Statements 1, 2 and 4 are true are true d. Statements 1, 4 and 5 are true e.Statements 2, 4 and 5 are true f. Statements 2, 3 and 4 are true
Statement 1: Manufacturing overhead is an indirect cost with respect to units of product. Statement 2: Depreciation on office equipment would be included in the cost of goods manufactured. Statement 3: Rent on factory building used in the production process would be classified as a period cost and as a fixed cost. Statement 4: The amount that a manufacturing company could earn by renting out unused portion of its warehouse is an example of an opportunity cost. Statement 5: Internal failure costs result from identification of defects during the appraisal process such as scrap, rejected products, rework and downtime. a. All statements are true b. Statements 1, 3 and 5 c.Statements 1, 2 and 4 are true are true d. Statements 1, 4 and 5 are true e.Statements 2, 4 and 5 are true f. Statements 2, 3 and 4 are true
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Statement 1: Manufacturing overhead is an indirect cost with respect to units of product.
Statement 2: Depreciation on office equipment would be included in the cost of goods manufactured. Statement 3: Rent on factory building used in the production process would be classified as a period cost and as a fixed cost.
Statement 4: The amount that a manufacturing company could earn by renting out unused portion of its warehouse is an example of an opportunity cost.
Statement 5: Internal failure costs result from identification of defects during the appraisal process such as scrap, rejected products, rework and downtime.
a. All statements are true b. Statements 1, 3 and 5 c.Statements 1, 2 and 4 are true
are true
d. Statements 1, 4 and 5 are true
e.Statements 2, 4 and 5 are true f. Statements 2, 3 and 4 are true
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