Nonmanufacturing costs include ______.

• A. factory overhead
• B. selling and administrative expenses
• C. work-in-process inventory
• D. direct materials and direct labor

Answer: (B)

Verified step by step guidance

1. Understand the concept of nonmanufacturing costs: These are costs that are not directly associated with the production process. They typically include expenses related to selling, administrative, and other activities outside of manufacturing.
2. Review the options provided in the problem: Factory overhead, selling and administrative expenses, work-in-process inventory, and direct materials and direct labor.
3. Eliminate options that are manufacturing costs: Factory overhead, work-in-process inventory, and direct materials and direct labor are all costs directly tied to the production process and are classified as manufacturing costs.
4. Identify the correct classification: Selling and administrative expenses are costs incurred outside of the production process, such as marketing, office salaries, and utilities for administrative offices. These are nonmanufacturing costs.
5. Conclude that the correct answer is selling and administrative expenses, as they align with the definition of nonmanufacturing costs.