Direct and Indirect Costs: Direct Costs: The cost which is easily traceable to a specific cost object and are not limited to the direct materials used or direct labor involved in the production process refers to direct cost. In other words, the costs that are directly related to the process of production is direct cost. Examples of direct costs are direct materials, direct labor and direct expenses that are directly attributable to a particular product such as rent paid for equipment, insurance paid for raw materials etc. Indirect Costs: The cost that is not easily traceable or assigned to a specific product refers to indirect costs. Indirect costs is associated more with the operating activities of the company and not limited to the production process. Examples of indirect costs include selling and distribution expenses, office maintenance, electricity and utilities etc. To state: The classification of cost whether direct or indirect based on the description of product costs for the production of sports equipment by Diez Company.

Question

Want to see the full answer?

Answer 1

Question

Chapter 18, Problem 4QS

To determine

Introduction:

Direct and Indirect Costs:

Direct Costs:

The cost which is easily traceable to a specific cost object and are not limited to the direct materials used or direct labor involved in the production process refers to direct cost. In other words, the costs that are directly related to the process of production is direct cost. Examples of direct costs are direct materials, direct labor and direct expenses that are directly attributable to a particular product such as rent paid for equipment, insurance paid for raw materials etc.

Indirect Costs:

The cost that is not easily traceable or assigned to a specific product refers to indirect costs. Indirect costs is associated more with the operating activities of the company and not limited to the production process. Examples of indirect costs include selling and distribution expenses, office maintenance, electricity and utilities etc.

To state:

The classification of cost whether direct or indirect based on the description of product costs for the production of sports equipment by Diez Company.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Don't use ai

What characterizes the faithful representation principle in accounting ?

Novak Company has the following stockholders' equity accounts at December 31, 2025. Common Stock ($100 par value, authorized 7,600 shares) $459,100 Retained Earnings 266,700 a. Prepare entries in journal form to record the following transactions, which took place during 2026 1. 290 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.) 2. A $22 per share cash dividend was declared. 3. The dividend declared in (2) above was paid. 4. The treasury shares purchased in (1) above were resold at $101 per share. 5. 500 shares of outstanding stock were purchased at $103 per share. 6. 380 of the shares purchased in (5) above were resold at $96 per share. b. Prepare the stockholders' equity section of Novak Company's balance sheet after giving effect to these transactions, assuming that the net income for 2026 was $86,300. State law requires restriction of retained earnings for the amount of treasury stock.