Question

Indicate whether each of the following costs of an automobile manufacturer would be classified as direct...

Indicate whether each of the following costs of an automobile manufacturer would be classified as direct materials, direct labor, or manufacturing overhead.

(a)

Direct MaterialsDirect LaborManufacturing Overhead

 Windshield.
(b)

Direct MaterialsDirect LaborManufacturing Overhead

 Engine.
(c)

Direct MaterialsDirect LaborManufacturing Overhead

 Wages of assembly line worker.
(d)

Direct MaterialsDirect LaborManufacturing Overhead

 Depreciation of factory machinery.
(e)

Direct MaterialsDirect LaborManufacturing Overhead

 Factory machinery lubricants.
(f)

Direct MaterialsDirect LaborManufacturing Overhead

 Tires.
(g)

Direct MaterialsDirect LaborManufacturing Overhead

 Steering wheel.
(h)

Direct MaterialsDirect LaborManufacturing Overhead

 Salary of painting supervisor.
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Answer #1

Direct Labor: The labor cost involved directly related to production eg. Wages of worker.

Direct Material: The cost of material that is used directly in production.

Manufacturing overhead: The indirect expense associated with production, this expense are generally allocated on certain basis or a pre defined criteria.

Keeping in mind above explanation the classification is as below

Windsheild, Engine, Steering Wheel and Tires - Direct Material.

Wages of Assembly line worker - Direct labor

Depreciation of Factory machine, Factory machine lubricants and salary of painting supervisior - Manufacturing overhead.

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