Asked by Tejuan Jones on Jul 02, 2024
Verified
The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n) :
A) period cost.
B) direct material cost.
C) indirect material cost.
D) opportunity cost.
Indirect Material Cost
Costs of materials that are part of the production process but are not directly traceable to a finished product.
Lubricants
Substances applied to reduce friction between surfaces in mutual contact, which ultimately decreases the heat generated when the surfaces move.
Period Cost
Expenses incurred by a business that are not directly tied to production activities, such as administrative and selling expenses.
- Familiarize oneself with the segregation of expenditures associated with a manufacturing milieu, detailing direct and indirect materials, labor involvement, and overhead implications.
Verified Answer
CD
Crystal D. Plump7 days ago
Final Answer :
C
Explanation :
The cost of lubricants used to grease a production machine is an example of an indirect material cost because it is not directly traceable to the production of a specific product but is necessary for the production process. Period cost includes expenses that are not directly related to the production process, such as rent and salaries. Direct material cost includes materials that can be directly traced to the production of a specific product. Opportunity cost refers to the cost of forgoing the next best alternative.
Learning Objectives
- Familiarize oneself with the segregation of expenditures associated with a manufacturing milieu, detailing direct and indirect materials, labor involvement, and overhead implications.