The PC Works assembles custom computers from components supplied by various manu
ID: 2333869 • Letter: T
Question
The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company.
Required:
For each cost, indicate whether it would most likely be classified as direct labor, direct materials, manufacturing overhead, selling, or an administrative cost.
1. The cost of a hard drive installed in a computer Direct labor cost Direct materials cost O Manufacturing overhead cost O Marketing and selling cost Administrative cost 2. The cost of advertising in the Puget Sound Computer User newspaper Direct labor cost Direct materials cost O Manufacturing overhead cost O Marketing and selling cost Administrative cost 3. The wages of employees who assemble computers from components Direct labor cost Direct materials cost O Manufacturing overhead cost OMarketing and selling cost Administrative cost 4. Sales commissions paid to the company's salespeople Direct labor cost Direct materials cost O Manufacturing overhead cost O Marketing and selling cost Administrative cost 5. The wages of the assembly shop's supervisor Direct labor cost Direct materials cost O Manufacturing overhead cost O Marketing and selling cost Administrative costExplanation / Answer
Answer 1 - It is a direct material cost since hard drive is an essential part for computer.
Answer 2 - It is a marketing and selling cost since it is an advertisement.
Answer 3 - It is a direct labour cost since assembling is the main work perfomed by PC Works.
Answer 4 - It is a marketing and selling cost .
Answer 5 - It is a manufacturing overhead cost since it is related to the main work perfomed by PC Works.
Answer 6 - It is an admnistrative cost.
Answer 7 - It is a manufacturing overhead cost since it is related to the assembling of computers.
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