Direct Material cost: Direct material cost is the cost of the material which is directly involved in the production. It constitutes the major portion of the total cost of the finished product. For example: The cost of plastic is the direct material for manufacturing a bottle. Direct Labor Cost: Direct labor cost is the cost of the labor paid to the employees who are directly involved in converting the raw materials to the finished products. It constitutes the major portion of the total cost of the finished product. For example: Wages paid to the mechanic for repairing an automobile. Factory Overhead Cost : Factory overhead cost is the cost other than the direct material cost, and the direct labor cost which is not directly involved in the production process of converting the raw materials to the finished products. If the direct material cost or direct labor cost does not constitute the major portion of the total cost of the finished product, then it may be classified as the factory overhead cost. For example: Cost of repairing, and maintaining factory equipment. To identify: The given costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for the automobile manufacturer.

Question

Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer:a. Wages of employees that operate painting equipmentb. Wages of the plant supervisorc. Steeld. Oil used for assembly line machinery

Answer 1

Question

Chapter 16, Problem 16.2APE

To determine

Direct Material cost:

Direct material cost is the cost of the material which is directly involved in the production. It constitutes the major portion of the total cost of the finished product. For example: The cost of plastic is the direct material for manufacturing a bottle.

Direct Labor Cost:

Direct labor cost is the cost of the labor paid to the employees who are directly involved in converting the raw materials to the finished products. It constitutes the major portion of the total cost of the finished product. For example: Wages paid to the mechanic for repairing an automobile.

Factory Overhead Cost:

Factory overhead cost is the cost other than the direct material cost, and the direct labor cost which is not directly involved in the production process of converting the raw materials to the finished products. If the direct material cost or direct labor cost does not constitute the major portion of the total cost of the finished product, then it may be classified as the factory overhead cost. For example: Cost of repairing, and maintaining factory equipment.

To identify: The given costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for the automobile manufacturer.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer:a. Wages of employees that operate painting equipmentb. Wages of the plant supervisorc. Steeld. Oil used for assembly line machinery

Manufacturing overhead costs include O direct materials, sales commissions, and factory assembly workers' wages O administrative taxes and insurance, sales commissions, and factory assembly workers' wages O indirect materials, factory supervisors' salaries, and factory depreciation O direct materials, administrative taxes and insurance, and sales commissions

Classifying Costs as Materials, Labor, or Factory Overhead Indicate whether each of the following costs of an automobile manufacturer would be classified as direct materials cost, direct labor cost, or factory overhead cost: Cost Classification a. Automobile engine b. Brake pads c. Depreciation of robotic assembly line equipment d. Glass for front and rear windshields e. Safety helmets and masks for assembly line workers f. Salary of quality control inspector g. Steering wheel h. Tires i. Wages of assembly line workers