The PC W orks assembles custom computers from components sup

The PC W orks assembles custom computers from components supplied by various manufacturers. The company is very small and its op 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 materials, direct labor, manufacturing overhead, selling,or an administrative cost

Solution

Answer 3 - a. Direct Labor Costs Direct Labor costs are those labor costs that can be easily traced to individual units of the products. The Wages paid to employees who assembles computer from components are directly tracable to individual units of the products, so, it is a direct labor.