Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

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Multiple Choice

Which of the following would be classified as direct materials costs for an automobile manufacturer?

Steel used to manufacture car bodies

Electricity used to power the assembly line

Depreciation on manufacturing equipment

Factory supervisor salaries

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Verified step by step guidance

Understand the concept of direct materials costs: Direct materials are raw materials that can be directly traced to the production of a specific product. These materials are integral to the finished product and are easily identifiable in the manufacturing process.

Analyze each option provided in the problem: Steel used to manufacture car bodies, electricity used to power the assembly line, depreciation on manufacturing equipment, and factory supervisor salaries.

Determine whether each option meets the criteria for direct materials costs: Steel used to manufacture car bodies is a raw material directly traceable to the production of automobiles, making it a direct material cost. The other options (electricity, depreciation, and salaries) are not raw materials and are classified as indirect costs or overhead.

Classify the remaining options: Electricity used to power the assembly line is considered manufacturing overhead. Depreciation on manufacturing equipment is also part of manufacturing overhead. Factory supervisor salaries are classified as indirect labor costs, which fall under manufacturing overhead.

Conclude that the correct classification for direct materials costs in this scenario is steel used to manufacture car bodies, as it directly contributes to the production of the automobile and meets the definition of direct materials.