Question

The cost towards machining of special jigs or fixtures, pattern, tooling made for the job is:

• A. Direct expense
• B. Administrative expense
• C. Indirect material cost
• D. Overhead cost

Hint:

When calculating production costs, remember that direct expenses are easily traceable to the product, whereas overhead costs are shared across multiple products.

Answer 1

The Correct Option is A

The cost associated with machining special jigs, fixtures, patterns, or tooling made specifically for a job is classified as a direct expense. These costs are directly attributable to the production of the specific product or job and can be traced to the cost object without any allocation. Indirect material costs and overhead costs are not directly traceable to a single product, and administrative expenses are related to general business operations.