Concept explainers
Which 01 the following is not considered a cost of manufacturing a product
A. Direct materials cost
B.
C. Sales salaries
D. Direct labor cost
Concept Introduction:
Direct and Indirect Costs:
Manufacturing costs can be divided into two types; Direct costs and Indirect costs. Direct costs are easily traceable with the product like direct material and direct labor and indirect costs are not traceable easily like indirect material indirect labor and overheads.
Manufacturing overhead costs:
Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads.
To choose:
The cost which is not considered as cost of manufacturing a product
Answer to Problem 1SEQ
C. Sales Salaries
Explanation of Solution
Explanation for correct answer:
Sales Salaries are considered as administrative costs and not the manufacturing costs. Hence option c is the right answer.
Explanation for incorrect answers:
A. Direct Material cost is a manufacturing cost. Hence option A is incorrect answer.
B. Factory overhead cost is a manufacturing cost. Hence option B is incorrect answer.
D. Direct labor cost is a manufacturing cost. Hence option D is incorrect answer.
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EBK SURVEY OF ACCOUNTING
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