Question

The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that the company incurs.

Required:

For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost.

1. The cost of a hard drive installed in a computer.

multiple choice 1

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

2. The cost of advertising in the Puget Sound Computer User newspaper.

multiple choice 2

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

3. The wages of employees who assemble computers from components.

multiple choice 3

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

4. Sales commissions paid to the company’s salespeople.

multiple choice 4

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

5. The salary of the assembly shop’s supervisor.

multiple choice 5

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

6. The salary of the company’s accountant.

multiple choice 6

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

7. Depreciation on equipment used to test assembled computers before release to customers.

multiple choice 7

• Direct labor cost

• Direct materials cost

• Manufacturing overhead cost

• Selling cost

• Administrative cost

Answer 1

Answer-

1	The cost of a hard drive installed in a computer.	Direct materials cost
2	The cost of advertising in the Puget Sound Computer User newspaper.	Marketing and selling cost
3	The wages of employees who assemble computers from components.	Direct labor cost
4	Sales commissions paid to the company’s salespeople.	Marketing and selling cost
5	The salary of the assembly shop’s supervisor.	Manufacturing overhead cost
6	The salary of the company’s accountant.	Administrative cost
7	Depreciation on equipment used to test assembled computers before release to customers.	Manufacturing overhead cost