Question

Allison Company manufactures and sells hand-painted clay figurines of popular musicians. Shown below are some of the costs incurred by Allison Company for the current year:

Cost of clay used in production $165,000
Wages paid to the workers who paint the figurines $190,000
Sales manager’s salary $122,000
Cost of advertising $147,000
What is the total amount of the direct costs above?
Group of answer choices
a.$165,000
b.$355,000
c.$312,000
d.$502,000

Answer 1

The total amount of direct costs for Allison Company, which include the cost of clay and wages for painters, is $355,000. This amount represents the total direct production costs, making the correct answer option b. $355,000.

Step-by-step explanation:

The question asks for the calculation of the total amount of direct costs from provided cost figures related to Allison Company's production of hand-painted clay figurines. Direct costs are those that can be directly attributed to the production of a product, such as materials and labor. In this case, the cost of clay used in production and the wages paid to workers who paint the figurines are direct costs.

The cost of clay amounts to $165,000, and the wages for the painting workers are $190,000. The sum of these costs gives us the total direct costs for the figurines:

• Cost of clay: $165,000
• Wages for painters: $190,000

By adding these together ($165,000 + $190,000), we get a total of $355,000, which is the total amount of direct costs for Allison Company for the current year. Therefore, the correct option is b. $355,000.