Asked by Allyson Welch on Jul 04, 2024
Verified
Factory rent
A)Prime costs
B)Conversion costs
C)Both prime and conversion costs
D)Neither prime nor conversion costs
Factory Rent
Factory rent refers to the cost associated with leasing a premise for manufacturing operations, classified as an overhead expense in accounting.
Prime Costs
The sum of expenses for the raw materials and labor directly involved in the manufacturing of a product.
Conversion Costs
The aggregate expenditure on direct labor and manufacturing overheads used for turning raw materials into final products.
- Define and differentiate between prime costs and conversion costs.
Verified Answer
HW
Henry WalshJul 09, 2024
Final Answer :
b
Explanation :
Factory rent is considered a factory overhead cost because it is an indirect cost associated with the production process but cannot be directly traced to the production of specific goods.
Learning Objectives
- Define and differentiate between prime costs and conversion costs.