Asked by Karla Reyes on May 02, 2024
Verified
Labor and material costs are typically:
A) semivariable costs.
B) fixed costs.
C) indirect costs.
D) direct costs.
E) semivariable costs and fixed costs.
Semivariable Costs
Costs that contain both fixed and variable components and change in proportion to activity levels, but not as directly as variable costs.
Direct Costs
Expenses that can be directly traced to producing specific goods or services, such as materials and labor.
Indirect Costs
Costs that are not directly attributable to a specific project, product, or activity but are necessary for the general operation of a business.
- Differentiate between direct and indirect costs, including their categorizations.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
D
Explanation :
Labor and material costs are direct costs because they can be directly attributed to the production of a particular product or service. They do not fall into the category of semivariable or fixed costs, which are typically associated with overhead expenses. Indirect costs are those that cannot be directly traced to a specific product or service, such as rent or administrative salaries.
Learning Objectives
- Differentiate between direct and indirect costs, including their categorizations.