The correct statement is:

Question

Quizplus · Accepted Answer

Glue, nails, and screws are considered indirect materials and are included in the overhead costs of the factory. They become part of the finished product, but their cost is not directly traceable to a specific unit of production, so they are classified as factory overhead.

Answer: C
 Power used for factory lighting and heating is an indirect cost that is necessary to run the factory, but it is not directly tied to the production of a specific product. As such, it is classified as a period cost rather than a product cost.

Answer: D
 Absorption costing is a costing method that assigns all factory costs (both direct and indirect) to products. This includes both product costs (such as direct materials and direct labor) and period costs (such as factory utilities and rent).

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