Question

Determine whether each of the following costs should be classified as direct materials, direct labor, or manufacturing overhead. (a) select an option Frames and tires used in manufacturing bicycles. (b) select an option Wages paid to production workers. (c) select an option Insurance on factory equipment and machinery. (d) select an option Depreciation on factory equipment.

Answer 1

Answer: "(a) Frames and tires used in manufacturing bicycles" - Direct materials.

"(b) Wages paid to production workers." - Direct labor.

"(c) Insurance on factory equipment and machinery." - Manufacturing overhead.

"(d) Depreciation on factory equipment." - Manufacturing overhead.

Explanation: Direct materials are all those that are used directly in the production of a good or service.

Direct labor is that directly involved in the production of a good or service.

Manufacturing overheads are all those expenses that, although necessary for the production of a good or service, are not directly involved in the production process.