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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

When using job order costing for a professional service business, the primary product (service) costs are:
A.Direct Materials and Overhead
B.Direct Materials and Direct Labor
C.Direct Materials. Direct Labor, and Overhead D. Direct Labor and Overhead

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 primary product cost for a professional service business using job order costing

Explanation

Explanation for correct answer:

The primary product cost for a professional service business using job order costing are Direct Labor and Overhead. Hence option D is the right answer.

Explanation for incorrect answers:

A. The primary product cost for a professional service business using job order costing are Direct Labor and Overhead...

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