Question

Which of the following would NOT be a cost that could be directly traced to a custom piece of furniture based upon physical observation?

a. the labor of the woodworker who finishes the wood of the piece
b. the depreciation paid on factory equipment
c. the wood and upholstery materials that are in the final piece
d. the labor of the worker assembling the piece of furniture

Answer 1

The correct option is C. The depreciation on factory equipment cannot be directly traced to a custom piece of furniture, making it an indirect cost, unlike the direct costs associated with materials and labor.

Step-by-step explanation:

The cost that would NOT be directly traced to a custom piece of furniture based upon physical observation is b. the depreciation paid on factory equipment. This is because depreciation is considered an indirect cost associated with the entire operation of the factory and cannot be specifically assigned to the production of a single piece of furniture.

In contrast, the costs of materials like wood and upholstery (c), as well as the labor directly involved in finishing (a) and assembling the furniture (d), are direct costs that can be clearly attributed to the creation of a specific item.