Assume That Facility Costs Are $350,000 Per Year for a Plant

Multiple Choice

Assume that facility costs are $350,000 per year for a plant occupying 20,000 square feet.The cost per square foot is $17.50.A value stream occupying 10,000 square feet would be assigned a cost of $175,000.If the value-stream manager figures out how to do the same tasks with 5,000 square feet, the cost would be reduced to $87,500.Any unabsorbed facility cost would be:

A) ​deducted from plant as depreciation expenditure.
B) ​deducted from revenue as a separate item.
C) ​deducted from capital as an opportunity cost.
D) ​deducted from rental expenditure in the company's income statement.