Question

A leaky roof that allows rain to spoil the jobs beneath is charged to:

a) Loss from Abnormal Spoilage
b) Repair and Maintenance Expense
c) Indirect Materials Expense
d) Direct Materials Cost

Answer 1

The correct option is b) Repair and Maintenance Expense; The correct recording for the expenses related to a leaky roof causing spoilage would be under Repair and Maintenance Expense, as it's a cost to maintain business assets, not directly tied to production materials.

Step-by-step explanation:

The costs associated with a leaky roof that allows rain to spoil the jobs beneath would most accurately be recorded as a Repair and Maintenance Expense. This type of expense is considered a general operating cost necessary for maintaining the functionality and efficiency of a business's assets.

It does not fall under the category of Loss from Abnormal Spoilage as that pertains more directly to manufacturing defects or inefficiencies, nor is it an Indirect Materials Expense which might include costs for materials not directly traceable to the finished product. Furthermore, it is not a Direct Materials Cost because those costs are associated with materials that become a part of the finished product directly.