Question

Which of the following would NOT be a line item of a company reporting costs by function?

(a) Administration
(b) Manufacturing
(c) Utilities expense
(d) Distribution

Answer 1

Option (c), Utilities expense is not a function and would not be a standalone line item when reporting costs by function; it gets allocated among different functions instead.

Step-by-step explanation:

The item that would NOT be a line item of a company reporting costs by function is (c) Utilities expense. When companies report costs by function, they categorize expenses according to the part of the business that incurs the expense, such as administration, manufacturing, and distribution.

Utilities expense is typically reported as a type of expense related to the facilities used by the functions but is not a function itself. Instead, utilities would be allocated among the different functions based on usage or some allocation method. The functions like administration, manufacturing, and distribution would then include their portion of utilities in their overall expenses.