The monthly cost of renting manufacturing equipment is:
A) part of conversion cost and a period cost.
B) part of prime cost and an inventoriable cost.
C) part of prime cost and a period cost.
D) part of conversion cost and an inventoriable cost.

Question

Quizplus · Accepted Answer

The monthly cost of renting manufacturing equipment is part of conversion cost (because it includes costs to convert raw materials into finished products, such as labor and overhead, which includes equipment rental) and an inventoriable cost (because it is directly associated with the production of goods and can be capitalized on the balance sheet as part of inventory until the goods are sold).

The Monthly Cost of Renting Manufacturing Equipment Is