Question

Charlie's Cupcakes is a company that produces cupcakes. The company uses a factory to produce many cupcakes per day. Factory workers mix the ingredients and package the cupcakes to sell them to customers.

1. List the direct and indirect materials needed to make the cupcakes.

2. Which workers would be considered direct labor? Which workers would be considered indirect labor?

3. What other manufacturing overhead costs would be incurred in this production process?

Answer 1

Answer 1-

Direct Materials- Direct materials are those raw materials which will get converted into a finished product. In other words, direct materials are related to the production.

Indirect Materials- Indirect Materials are those materials which will not get converted into a finished product. They are related to the making process of a finished product.

Direct Materials needed to make the

cupcakes-

1- Flour   2-Sugar   3- Salt

4- Added flavours 5- Eggs 6- Milk

7- Cocoa Powder 8- Chocolate or vanilla essence etc.

Indirect Materials needed to make the cupcakes-

1- Oven 2- Utensils3- Whiskers

4- Mixers 5- Gloves

6- Packaging Machines 7- Packets etc.

Answer 2-

Direct Labour- Direct labour is directly involved in the production work. In making cupcakes direct labor would be-

1- Chefs2- Assistants of chefs

3- Workers for mixing and grinding

4- Labour to do other task in completing the cupcakes etc.

Indirect Labour- Indirect labouris related to other work . They don’t help in making the product. They would be -

1- Cleaner2- Washerman 3- Electricians 4- Engineers 5- Guards etc.

Answer 3- Other overheads are those expenses that are related to the factory not to the product.Other manufacturing costs that would incurred in making cupcakes are-

1- Rent 2- Cleaning 3- Factory maintenance cost 4- Electricity 5- Salary 6- Water 7- Heat 8- Machinery etc.