A firm has to pay a 20c per unit royalty to the inventor of a device which it manufactures and sells. How would the royalty charge be classified in the firm's accounts?
A、Selling expense
B、Direct expense
C、Production overhead
D、Administrative overhead
A、Selling expense
B、Direct expense
C、Production overhead
D、Administrative overhead
【参考答案及解析】
The royalty cost can be traced in full to the product, ie it has been incurred as a direct consequence of making the product. It is therefore a direct expense. Options A, C and D are all overheads or indirect costs which cannot be traced directly and in full to the product.
The royalty cost can be traced in full to the product, ie it has been incurred as a direct consequence of making the product. It is therefore a direct expense. Options A, C and D are all overheads or indirect costs which cannot be traced directly and in full to the product.