Consider a service company that provides carpet cleaning and uses straight-line depreciation. Classify the cost of the depreciation on the carpet cleaning machines.

 Which of the following are indirect costs for the finishing department of a furniture manufacturer? (Check all that apply.)
Multiple select question.
 
Electricity cost for the plant
Plant manager's salary
Finishing department manager's salary
Reason:
Since the finishing department manager works directly for the finishing department, this is a direct cost.
 
Rent on the manufacturing facility
Correct Answer
Electricity cost for the plant
Plant manager's salary
Rent on the manufacturing facility

Which of the following are period costs for a manufacturer? (Check all that apply.)
Multiple select question.
 
Rent on the office building
 
Sales commissions
 
Utilities for the factory plant
Reason:
Utilities for the factory plant are a product costs.
 
Salary for administrative staff
 
Wages for factory labor
Reason:
Wages for factory labor are product costs.
Correct Answer
Rent on the office building

 
Sales commissions
Salary for administrative staff
Prime costs consists of:
Multiple choice question.
 
direct labor and direct materials
 
factory overhead and direct labor
 
factory overhead and direct materials
Correct Answer
direct labor and direct materials

Consider a service company that provides carpet cleaning. Classify the cost of the hourly workers who clean carpets for customers.
Multiple select question.
 
Direct
 
Overhead
Reason:
The hourly workers who clean carpets are a direct and variable cost.
 
Period
Reason:
The hourly workers who clean carpets are a direct and variable product cost.
 
Indirect
Reason:
The hourly workers who clean carpets are a direct and variable cost.
Correct Answer
Direct

 
Which of the following are direct costs for a shoe manufacturer? (Check all that apply.)
Multiple select question.
 
Shoe laborers who make the shoes
 
Shoe factory manager's salary
Reason:
This is an indirect cost.
 
Leather used in the shoes
 
Factory rent
Reason:
Factory rent is an indirect cost.


Direct materials costs for an automobile manufacturer would include all of the following:
Multiple select question.
 
tires
 
steering wheels
 
bumpers
 
employees who work on the product
Reason:
Tires, steering wheels, and bumpers are direct materials for an automobile manufacturer. Employees who work on the product are a direct labor cost.
 
purchasing agent
Reason:
Tires, steering wheels, and bumpers are direct materials for an automobile manufacturer.
Correct Answer
tires
steering wheels
bumpers

 
Consider a service company that provides carpet cleaning and uses straight-line depreciation. Classify the cost of the depreciation on the carpet cleaning machines.
Multiple select question.
Direct
Reason:
Depreciation is not a direct cost. It is an indirect cost.
Selling
Indirect
Period
Reason:
Straight-line depreciation is a fixed cost.
Correct Answer
Indirect

 

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