Question

10. A clothing manufacturer has the costs listed. Determine if each would be considered a direct...

10. A clothing manufacturer has the costs listed. Determine if each would be considered a direct or indirect cost if the cost object is an individual shirt.

a. Cost of fabric

b. Salary of clothing designer

c. Cost of buttons

11. During the production of its new broom, a manufacturer incurs each of the following costs. Would each cost be considered a direct or indirect cost if the cost object is an individual broom?

a. Electricity in production plant

b. Cost of plastic for handle

c. Cost of labor by production employees, billed at an hourly rate

12. Would each of the following costs be considered a direct or indirect cost for an individual lamp of a manufacturer?

a. Research and design on the materials used for the line of lamps

b. Cost of fabric for the lamp shade

c. Advertising expense for the line of lamps

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Answer #1
Direct Cost: Direct Costs are traceable to the production of a specific good or service.
Indirect Cost: Indirect costs go beyond the expenses associated with creating a particular product to include price of maintaining the entire company
Answer basis the above definations:
10 Cost of Fabric Direct
Salary Indirect
Cost of Button Direct
11 Electricity Direct
Plastic Direct
Labor Direct
12 Reserch Indirect
Fabric Direct
Advertising Indirect
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