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Questions and Answers
Which of the following is included as part of direct material costs?
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?
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?
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?
What kind of materials are glues, nails, and cleaning rags classified as?
What are direct materials and what costs are included as part of direct material costs?
What are direct materials and what costs are included as part of direct material costs?
How are indirect materials defined, and what are some examples of indirect materials?
How are indirect materials defined, and what are some examples of indirect materials?
What is direct labor, and what elements are included in direct labor cost?
What is direct labor, and what elements are included in direct labor cost?
What kind of labor costs are classified as direct labor costs, and how are they related to the production process?
What kind of labor costs are classified as direct labor costs, and how are they related to the production process?
What are direct materials and what costs are included as part of direct material costs?
What are direct materials and what costs are included as part of direct material costs?
How are indirect materials defined, and what are some examples of indirect materials?
How are indirect materials defined, and what are some examples of indirect materials?
What is direct labor, and what elements are included in direct labor cost?
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?
Which kind of labor costs are classified as direct labor costs, and how are they related to the production process?
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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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