Multiple Choice
Which of the following is a key difference in how Cost of Goods Sold (COGS) is determined under the perpetual inventory system compared to the periodic inventory system?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
Multiple Choice
Which of the following is an example of direct labor cost for a cell phone manufacturer?
A
Cost of raw materials used in manufacturing cell phones
B
Depreciation expense on factory equipment
C
Wages paid to assembly line workers who install components in cell phones
D
Salary of the factory manager overseeing production
Verified step by step guidance1
Understand the concept of direct labor cost: Direct labor cost refers to the wages paid to workers who are directly involved in the production process of a product. These costs are traceable to specific units of production.
Analyze the options provided: Review each option to determine whether it represents a cost directly tied to the production process or not.
Option 1: 'Cost of raw materials used in manufacturing cell phones' - This is not direct labor cost; it is classified as direct material cost because it pertains to the physical materials used in production.
Option 2: 'Depreciation expense on factory equipment' - This is not direct labor cost; it is considered an indirect cost or overhead because it is not directly tied to the labor involved in production.
Option 3: 'Wages paid to assembly line workers who install components in cell phones' - This is direct labor cost because these workers are directly involved in the production process. Option 4: 'Salary of the factory manager overseeing production' - This is not direct labor cost; it is considered an indirect cost or overhead because the manager is not directly involved in the physical production of cell phones.
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