The depreciation on plant acquired by a manufacturing company is treated as
Answer Details
The depreciation on plant acquired by a manufacturing company is treated as factory overhead.
Depreciation is the gradual decrease in the value of an asset due to wear and tear, aging, and obsolescence over time. In a manufacturing company, the plant is a major asset that is used in the production process. The depreciation on plant is a cost that is incurred in the production of goods and is therefore treated as a factory overhead cost. This cost is allocated to the cost of goods sold and ultimately impacts the profitability of the manufacturing company.