Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year: Easton can currently purchase the scooters it makes from another company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. Which of the following costs would be classified as a facility-level cost?

Question

Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year:  Easton can currently purchase the scooters it makes from another company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. Which of the following costs would be classified as a facility-level cost?

Quizplus · Accepted Answer

Facility-level costs are incurred to support the entire company. They are not related to any specific product, batch, or unit of product. Because these costs maintain the facility as a whole, they are frequently called facility-sustaining costs. Facility-level costs include building rent or depreciation, personnel administration and training, property and real estate taxes, insurance, maintenance, administrative salaries, general selling costs, landscaping, utilities, and security.

Easton Company Makes and Sells Scooters