Final answer:
A factory supervisor's wages are categorized as indirect labor because they are not involved in the direct creation of a product, making the statement True.
Step-by-step explanation:
A factory supervisor's wages are typically categorized as indirect labor because they are not directly associated with the hands-on manufacturing of a product. Instead, a supervisor's role is more about managing the production process and the workers who are performing direct labor tasks. This management function is not directly tied to the output of an individual product or service, making the compensation of a factory supervisor an indirect labor cost. Therefore, the statement that a factory supervisor's wages are classified as indirect labor is True.
In a scenario where a firm is responding to union demands for higher wages by investing in more machinery, the productivity of the laborers may increase due to the enhanced physical capital equipment. However, this could potentially lead to the firm hiring fewer workers to operate the more efficient production technology. This shift in the production process affects the labor costs, impacting the supply decisions within the firm.