Question

Wages paid to the supervisor of the warehouse where raw materials and parts are temporarily stored before being used in production is considered an example of?

1) Direct labor cost
2) Indirect labor cost
3) Variable cost
4) Fixed cost

Answer 1

The wages paid to the warehouse supervisor are considered an 2) indirect labor cost as they are necessary for production but not allocated to a specific product.

Step-by-step explanation:

The wages paid to the supervisor of the warehouse where raw materials and parts are temporarily stored before being used in production are considered an example of indirect labor cost. Indirect labor costs are part of manufacturing overhead and are not directly traceable to a specific product.

Unlike direct labor costs, which are directly associated with the production of goods, indirect labor costs are necessary for production to occur but are not allocated to a specific product. In contrast, a variable cost varies with output, such as raw materials or additional labor needed for production.

As output increases, variable costs increase. Conversely, a fixed cost, such as rent on a warehouse, remains constant regardless of the level of production.