Question

An accounting office offers both tax preparation and bookkeeping ot its small business clients. Which of the following are both direct costs of the tax preparation division?

a. Accounting office manager salary and tax preparer salary

b. Depreciation on office building and depreciation on office equipment

c. Software license for tax preparation software and filing fees for tax returns

d. Service fees for computer network used by the accounting office and cloud computer storage fees for tax returns.

Answer 1

The correct answer for the question is Option C - Software license for tax preparation software and filing fees for tax returns. The software license for tax prepration software and filing fees of tax return are both direct costs associated with the tax preparation services and are hence part of the product costs. This is the correct answer.

Option A is incorrect. Accounting office manager salary is not a direct cost involved in the tax prepration division. Hence, this opiton is not valid.

Option B is incorrect. Depreciation on office building and office equipment are not direct costs. They are generally classified as overheads. Hence, such expenses are not direct costs.

Option D is incorrect. These are not direct costs involved in the tax preparation division because the service fees for computer network is used by the accounting office as a whole.

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