Direct vs Indirect Materials Quiz & Flashcards

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Questions and Answers

Which of the following is included as part of direct material costs?

Cost of living allowance (COLA)

Cost of delivery containers, net of deposit refunds

Cost of cleaning rags

Invoice price less discounts (correct)

What are indirect materials also known as?

Supplies (correct)

Direct materials

Factory overhead

Finished products

Which of the following is an element of direct labor cost?

Cost of cleaning rags

Basic compensation (correct)

Cost of delivery containers

Sales taxes

What kind of materials are glues, nails, and cleaning rags classified as?

Indirect materials Signup and view all the answers

What are direct materials and what costs are included as part of direct material costs?

Direct materials are materials that form an integral part of the finished product, and the costs included are invoice price less discounts, sales taxes, customs duties, delivery costs paid to vendors, and cost of delivery containers, net of deposit refunds. Signup and view all the answers

How are indirect materials defined, and what are some examples of indirect materials?

Indirect materials are those materials needed to complete a product, but their use is minimal or complex. Examples include glues, nails, welding materials, grease, lubricating oil, cleaning rags, and brushes. Signup and view all the answers

What is direct labor, and what elements are included in direct labor cost?

Direct labor is the labor directly involved in making the product, and the elements included in direct labor cost are basic compensation, production efficiency bonuses, employer's portion of social security taxes, and cost of living allowance (COLA). Signup and view all the answers

What kind of labor costs are classified as direct labor costs, and how are they related to the production process?

Direct labor costs are the labor costs directly involved in making the product, and they are related to the production process by being traceable without undue cost or inconvenience. Signup and view all the answers

What are direct materials and what costs are included as part of direct material costs?

Direct materials are materials that form an integral part of the finished product, and the costs included as part of direct material costs are invoice price less discounts, sales taxes, customs duties, delivery costs paid to vendors, and cost of delivery containers net of deposit refunds. Signup and view all the answers

How are indirect materials defined, and what are some examples of indirect materials?

Indirect materials are materials needed to complete a product, but the use of which is so minimal or complex that treating them as direct materials is futile. Some examples of indirect materials are glues, nails, welding materials, grease, lubricating oil, cleaning rags, and brushes. Signup and view all the answers

What is direct labor, and what elements are included in direct labor cost?

Which kind of labor costs are classified as direct labor costs, and how are they related to the production process?

Direct labor costs are the labor costs directly involved in making the product, and they are related to the production process by being specifically traced to the product without undue cost or inconvenience. Signup and view all the answers

Study Notes

Direct Material Costs

Direct material costs include the raw materials that are directly used in the production of goods.
Costs associated with items like steel for fabrication, wood for furniture, and plastics for products are included.

Indirect Materials

Indirect materials are also known as ancillary materials or overhead materials.
Examples include items not directly identified with any specific product, such as glues, nails, and cleaning rags.

Direct Labor Costs

Direct labor costs encompass all labor directly involved in manufacturing goods.
Includes wages for assembly line workers and craftsmen who handle the product during production.

Classification of Indirect Materials

Indirect materials are defined as supplies that can’t be directly traced to a specific product.
Examples include maintenance supplies and general cleaning products used in the manufacturing facility.

Understanding Direct Labor

Direct labor refers to labor costs directly tied to the creation of products.
Elements include hourly wages or salaries, benefits, and payroll taxes for employees involved in production.

Direct Labor in Production

Direct labor costs are related to employees who physically work on products.
These costs fluctuate with production levels and are crucial for calculating total manufacturing costs.

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Description

This quiz covers the concepts of direct and indirect materials costs in manufacturing. It explains what is included as part of direct material costs and defines indirect materials in the production process.