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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Which 01 the following is not considered a cost of manufacturing a product
A. Direct materials cost

B. Factory overhead cost

C. Sales salaries

D. Direct labor cost

To determine

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

C. Sales Salaries

Explanation

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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