Multiple Choice
Which of the following best characterizes variable costs in the context of inventory accounting?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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Which of the following is an indirect cost of manufacturing scooters?
A
Factory supervisor's salary
B
Direct materials used in production
C
Wages of assembly line workers
D
Cost of scooter wheels
Verified step by step guidance1
Understand the concept of direct and indirect costs: Direct costs are expenses that can be directly traced to the production of a specific product, such as materials and labor. Indirect costs, on the other hand, are expenses that cannot be directly traced to a single product and are often shared across multiple products or departments.
Review the options provided: Factory supervisor's salary, Direct materials used in production, Wages of assembly line workers, and Cost of scooter wheels.
Analyze each option: Direct materials (e.g., scooter wheels) and wages of assembly line workers are direct costs because they are directly involved in the production of scooters. The factory supervisor's salary, however, is an indirect cost because it is not directly tied to the production of a single scooter but rather supports the overall manufacturing process.
Classify the factory supervisor's salary as an indirect cost: This expense is part of manufacturing overhead, which includes costs that support production but are not directly attributable to specific units of output.
Conclude that the factory supervisor's salary is the correct answer as an indirect cost of manufacturing scooters, while the other options represent direct costs.
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