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JAMB Principles of Accounts 2002 Question 33

Question 33

Manufacturing Accounts

Costs that vary in proportion to the level of production in a manufaturing environment are known as

  1. A.control costs
  2. B.overheads
  3. C.direct costs
  4. D.indirect costs.
Show the answer and explanation

Answer: C (direct costs)

Explanation

Direct costs (materials, direct labour) rise and fall in step with the quantity produced.