Question

If a frozen pizza plant is the cost​ object, classify each of the following costs as direct or​ indirect, respectively: pizza​ ingredients, cafeteria workers​ wages, and janitorial supplies.

Answer 1

Pizza ingredients are direct costs, while cafeteria workers' wages and janitorial supplies are indirect costs in relation to the frozen pizza plant cost object.

Step-by-step explanation:

When identifying whether a cost is direct or indirect, it is essential to consider whether the cost can be easily and conveniently traced to the cost object, in this case, the frozen pizza plant. Let's classify each of the following costs respectively.

• Pizza ingredients: This cost is direct because these raw materials are directly involved in making the pizza and can be easily traced to the cost object.
• Cafeteria workers' wages: The wages paid to cafeteria workers are considered indirect costs as they do not directly contribute to the production of the pizza and cannot be traced to the cost object without significant effort.
• Janitorial supplies: Similar to cafeteria workers' wages, the cost of janitorial supplies is indirect as these supplies are used for cleaning and maintenance of the plant, which benefits all products and cannot be attributed to the cost object directly.

It's important for the entrepreneur or manager to correctly classify these costs for effective tracking and management of their business finances.