• 1 Marks

MI – May 2024 – L1 – SA – Cost Classifications

Identifies the classification of production costs from other costs.

Which of the following is classified as a production cost?

A. Other factory costs
B. Selling costs
C. Distribution costs
D. Administration costs
E. Finance costs

A. Other factory costs

Explanation: Production costs include direct and indirect costs related to the manufacturing process. Other factory costs, such as overheads or materials, are considered production costs. In contrast, selling, distribution, and finance costs are non-production costs typically classified as operating or administrative expenses.

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