Active Feet, a small manufacturer of shoes, hired an additional vice-president and purchased a barrel of synthetic rubber used to make shoe soles. These two expenses should be considered a (an) ____ and a (an) ____, respectively.
A) selling cost/cost of goods sold
B) overhead cost/cost of goods sold
C) selling cost/overhead cost
D) overhead cost/selling cost

Question

Quizplus · Accepted Answer

The salary of an additional vice-president is considered an overhead cost as it is an indirect expense related to the overall operation of the company. The purchase of synthetic rubber is a direct cost associated with the production of goods, thus it is considered a cost of goods sold.

Active Feet, a Small Manufacturer of Shoes, Hired an Additional