[amp_mcq option1=”Salary, wages and shop rent” option2=”Stationary post and telephone bills” option3=”Wages, input vehicle expenses and local taxes” option4=”Advertisement, statutory fee and audit fee” correct=”option3″]
The correct answer is C. Wages, input vehicle expenses and local taxes.
Direct expenses are those that can be directly attributed to the production of a good or service. They are usually variable costs, which means that they change in proportion to the volume of production. Examples of direct expenses include:
- Wages and salaries of production workers
- Materials used in production
- Depreciation of production equipment
- Utilities used in production
- Insurance on production equipment
- Property taxes on production facilities
Indirect expenses are those that cannot be directly attributed to the production of a good or service. They are usually fixed costs, which means that they do not change in proportion to the volume of production. Examples of indirect expenses include:
- Salaries of administrative staff
- Rent on office space
- Depreciation of office equipment
- Utilities used in the office
- Insurance on office equipment
- Property taxes on office buildings
In the case of the question, only option C includes only direct expenses. Option A includes both direct and indirect expenses, as does option D. Option B includes only indirect expenses.