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JAMB Principles of Accounts 2011 Question 28

Question 28

Manufacturing Accounts

The production cost that does not form part of the product but is incidental to production and facilitates the production activities is the

  1. A.prime cost
  2. B.indirect cost
  3. C.total cost
  4. D.direct cost.
Show the answer and explanation

Answer: B (indirect cost)

Explanation

Indirect costs (overheads) support production but cannot be traced to a unit of product.