C. Basic Economics of Professional Practice, con\'t. (10 questions) Indicate wha

Question

C. Basic Economics of Professional Practice, con't. (10 questions) Indicate what cost category is associated most commonly with the following expenses: 16. Billable time spent on projects by engineers a) Direct Labor b) Indirect Labor c) Payroll Burden d) General and Administrative 17. Rent and equipment leases a) Direct Labor b) Indirect Labor c) Payroll Burden d) General and Administrative 18. Non-billable time spent by clerical and accounting staffs a) Direct Labor b) Indirect Labor c) Payroll Burden d) General and Administrative

Explanation / Answer

The definitions of cost are given below -

Indirect labor –

This cost describes wages paid to workers that perform tasks that do not directly contribute to the production of goods or performance of services, such as support workers who help enable others to produce goods. For instance, a factory might employ janitors to keep facilities clean, foremen to oversee production workers and security guards to keep facilities safe. All of these workers are involved in indirect labor, because they do not actually produce any goods. Examples of other workers engaged in indirect labor include managers, accountants and maintenance staff.

Direct labor

It describes workers that are directly involved in the production of goods or the performance of services. For example, workers at a factory who assemble, machine, paint or otherwise help to physically produce products perform direct labor. Similarly, workers at a salon who actually perform haircuts, treatments and other services are involved in direct labor. The cost of paying wages to workers involved in production is a business's direct labor cost.

A general and administrative expense (G&A) refers to expenditures related to the day-to-day operations of a business. General and administrative expenses pertain to operation expenses rather that to expenses that can be directly related to the production of any goods or services, including rent, utilities, insurance and managerial salaries.

Payroll burden is the actual cost of a company to have an employee, aside from the salary the employee earns. Labor burden costs include benefits that a company must, or chooses to, pay for employees included on their payroll. These costs include but are not limited to payroll taxes, pension costs, health insurance, dental insurance, and any other benefits that a company provides an employee.

Answers -

16) a Direct labor

17) d - G & A

18) b - Indirect labor

19) c- Payroll burden

20) c - payroll burden

21) b - indirect labor

22) a - direct labor

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