The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $15,000,000 bond issuance, the Electric Mixer Division used $9,400,000 and the Electric Lamp Division used $5,600,000 for expansion. Interest costs on the bond totaled $980,000 for the year.
The above interest costs would be considered a(n) ________.
A) output unit-level cost
B) facility-sustaining cost
C) product-sustaining cost
D) batch-level cost

Question

Quizplus · Accepted Answer

The interest costs on the bond issuance would be considered a product-sustaining cost because they relate to the financing of the expansion projects for each respective division (Electric Mixer and Electric Lamp). This cost is not specific to any one unit or batch of products, nor is it related to the operation or maintenance of a facility.

The Conity Corporation Has an Electric Mixer Division and an Electric