Chapter 16: Q16-3SE (page 886)
Distinguishing between direct and indirect costs Granger Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.
- Direct materials
- Direct labor
- Indirect materials
- Indirect labor
- Other manufacturing overhead
a. Artists’ wages
b. Wages of materials warehouse workers
c. Paper
d. Depreciation on manufacturing equipment
e. Manufacturing plant manager’s salary
f. Property taxes on manufacturing plant
g. Glue for envelopes
Short Answer
Direct labor includes wages which is directly associated with the production process and the required matching is done.