Which of the following expenses relates to the profit and loss account of a manufacturing firm
Answer Details
The expense that relates to the profit and loss account of a manufacturing firm is the Administrative overhead.
Direct materials and direct labor are costs that are directly associated with the production of goods and are considered part of the cost of goods sold. Work-in-progress refers to goods that are in the process of being manufactured and are also considered part of the cost of goods sold.
Administrative overhead, on the other hand, refers to expenses that are not directly related to the production of goods, but rather to the general administrative functions of the business, such as salaries, rent, utilities, and office supplies. These expenses are considered operating expenses and are subtracted from the revenue in the profit and loss account to arrive at the net income.
Therefore, of the options provided, Administrative overhead is the expense that relates to the profit and loss account of a manufacturing firm.