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Hi. Mr.John
I have a question about direct cost. Maintenance cost of tools and fixtures are direct cost. Is tha true? And why maintenance cost of a machine used in production is not recorded as a prime cost for manufacturing company?No – maintenance cost of tools and fixtures is not a direct cost. It is an indirect cost.
If it had been a direct cost then it would be part of the prime cost, but since it cannot be measured for each unit individually it is not a direct cost and is not part of the prime cost.
I do suggest that you watch my free lectures on this. Our free lectures are a complete course for Paper F2 and cover everything needed to be able to pass the exam well.
I agree with you. Bu its given in the BPP book as a direct expense cost but I don’t know why
Another question when EOQ is accepted.
Annual price and annual ordering decreases , annual holding cost also decreases?I would need to see the whole question to know why they treated it as a direct cost.
I don’t understand your second question – “EOQ is accepted”. Have you mistyped? If you have typed it correctly, then again I would need to see the whole question.
(Please start a new thread when it is a question on a different topic 🙂 )
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