Question

Required: Consider the costs below for a company who manufactures cars and select whether the particular cost would most likely be direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. 1. The cost of seats installed in a car O Direct labor cost O Direct materials cost O Manufacturing overhead cost O Selling cost O Administrative cost 2. The cost of advertising on facebook. O Direct labor cost Direct materials cost O Manufacturing overhead cost Selling cost O Administrative cost 3. The wages of employees who assemble the cars. O Direct labor cost O Direct materials cost O Manufacturing overhead cost < Prey 1 of 11 !!! Next >

Answer 1

1. Answer : Direct material cost

Costs of seats installed in a car is a direct material cost as seat is direct material for car.

2. Answer : Selling cost

Cost of advertising on Facebook is selling cost as it is incurred for promotion of Product or service.

3. Answer : Direct labor cost

Wages to person who is directly engaged in making the product is direct labor cost.

The wages of employees who assemble the car is direct labor cost

4. Answer : Selling cost

Sales commission paid for car sold is incurred to promote a product thus it is selling cost

5. Answer : Manufacturing overhead cost

Manufacturing overhead cost is cost incurred while manufacturing process going on other than direct material cost and direct labor cost.

Thus salary to manufacturing supervisor is manufacturing overhead cost.

6. Answer : Administrative cost

Administrative cost is cost which not directly related to product and it's not specific.

Thus salary to CEO is administrative cost

7. Answer : manufacturing overhead cost

As discussed manufacturing overhead cost incurred while manufacturing process is going on .

Thus depreciation on equipment used for testing is manufacturing overhead cost.