Asked by David Plata on Apr 26, 2024
Verified
Mydas Ltd operates a large factory which manufactures three types of motor vehicles, including family cars, sports cars and motorcycles. If the cost object is a motorcycle, which of the following is a direct cost?
A) The costs of wheels on the motorcycle
B) The salary of the factory general manager
C) The salary of the factory quality inspector
D) The windscreen wipers on a family car
Direct Cost
A cost that can be directly traced to the production of specific goods or services, such as raw materials and labor.
Cost Object
Any item for which a separate measurement of costs is desired, such as products, services, projects, customers, or activities.
Motor Vehicles
Wheeled transportation vehicles powered by an internal combustion engine or electric motors, used for the conveyance of people or goods.
- Elucidate on the nature of direct versus indirect charges pertaining to specific cost entities.
Verified Answer
CL
Christopher LopezMay 02, 2024
Final Answer :
A
Explanation :
The costs of wheels on the motorcycle are directly related to the production of the motorcycle and can be easily traced to this specific cost object. The salary of the factory general manager and quality inspector are not directly related to the production of a specific vehicle and are considered indirect costs. The windscreen wipers on a family car are also not directly related to the production of a motorcycle and are therefore an indirect cost.
Learning Objectives
- Elucidate on the nature of direct versus indirect charges pertaining to specific cost entities.