QUESTION ONE 1.1 Classify each of the following costs as direct or indirect cost. (10) 1.1.1...
QUESTION ONE
1.1 Classify each of the following costs as direct or indirect
cost. (10)
1.1.1 Fabric used in the manufacture of shirts.
1.1.2 Grease for the factory machines.
1.1.3 Depreciation of factory machinery.
1.1.4 Cleaning materials.
1.1.5 Salary of the supervisor.
1.1.6 Wood used in making tables.
1.1.7 Wages of the person who operates the machine that makes the
shoes.
1.1.8 Rent of the factory.
1.1.9 Carriage costs on materials purchased.
1.1.10 Rent of the office building.
Homework Answers
Direct costs are those costs which can be directly and conveniently allocated to specific cost units/centers. Indirect costs are those costs which cannot be directly and conveniently allocated to specific cost units/centers
1.1.1 Fabric used in the manufacture of shirts - Direct cost,
since it is an integral part of the final product
1.1.2 Grease for the factory machines - Indirect cost, since it is
consumed in the production process
1.1.3 Depreciation of factory machinery - Indirect cost, since not
incurred for the product specifically
1.1.4 Cleaning materials - Indirect cost, since not incurred for
the product specifically.
1.1.5 Salary of the supervisor - Indirect cost, since not incurred
for the product specifically.
1.1.6 Wood used in making tables - Direct cost, since it is an
integral part of the final product
1.1.7 Wages of the person who operates the machine that makes the
shoes - Direct cost
1.1.8 Rent of the factory - Indirect cost, since not incurred for
the product specifically
1.1.9 Carriage costs on materials purchased - Direct cost, since
included in the cost of material
1.1.10 Rent of the office building - Indirect cost, since not
incurred for the product specifically.
Kindly comment if you need further assistance. Thanks
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