Humboldt Corporation manufactures electronic products, including calculators and

Question

Humboldt Corporation manufactures electronic products, including calculators and printers.

Cost items of the company include:

1. Labor on assembling a printer
2. Salary of an employee who supervises calculator manufacturing
3. Materials used in making a printer
4. Company president's salary
5. Salary of the manager of the Calculator Division
6. Depreciation on corporate headquarters building
7. Ink cartridges installed in printer during manufacture
8. Depreciation on equipment used in making calculators
9. Supplies used in corporate offices

Which of the costs listed above is a direct cost assuming the cost object is an individual printer?

A. Numbers 1 and 3

B. Numbers 1, 3, and 7

C. Number 3 only

D. None of the costs is direct to an individual printer

Explanation / Answer

Direct cost:

Direct cost are associated with the production of a product or services rendeered by a company. Direct cost is an expense to the company which can associate with "cost object" which can be department, product, etc. This also includes raw material, equipment, labor,etc.

So from the above example:

Direct cost for elctronic manufacturer including calculator and printer ncludes:

Answer is : B: No 1.3 and 7

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