Warehouse rent is a part of .a.factory cost.b.prime cost.c.distribution cost.d.production cost.
Question
Warehouse rent is a part of .a.factory cost.b.prime cost.c.distribution cost.d.production cost.
Solution
Warehouse rent is a part of c. distribution cost.
Here's why:
a. Factory cost: This is the cost associated with the actual production of goods. It includes direct materials, direct labor, and manufacturing overhead. Warehouse rent does not fall under this category because it's not directly related to the production process.
b. Prime cost: This is the total cost of direct materials and direct labor used in production. Again, warehouse rent does not fall under this category because it's not a direct material or labor cost.
c. Distribution cost: This includes all costs associated with storing and transporting the goods from the point of production to the point of sale. Warehouse rent falls under this category because it's a cost associated with storing the goods.
d. Production cost: This includes all the costs associated with producing a product, including direct materials, direct labor, and manufacturing overhead. While warehouse rent could be considered a part of the overall cost of producing a product, it's more accurately categorized as a distribution cost.
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