Chapter 18, Problem 8DQ

To determine

Introduction:

Direct Cost: The costs that are directly attributable to a specific product refers to direct costs. Direct Materials used in the production and direct labor engaged in the production are examples of direct costs.

Indirect Cost: The costs that cannot be directly attributable to a specific product refers to indirect costs. Indirect costs are incurred for the operation of the company but need not be necessarily relates to the production of specific product. Indirect costs may be fixed or variable. Rent, salaries paid to employees are few examples of the indirect costs.

To identify:

The three direct costs and indirect costs that would likely to be involved in the production of iPhones by Apple’s factory.