Q16-3SE - Horngren'S Financial And Managerial Accounting

Question

Distinguishing between direct and indirect costs Granger Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

1. Direct materials 
2.  Direct labor 
3. Indirect materials 
4. Indirect labor 
5. 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

Step-by-Step Solution

Answer

Direct labor includes wages which is directly associated with the production process and the required matching is done.

Definition of direct labor

Direct labor is defined as the cost incurred by a business to compensate the employees who are directly involved in the production press.

Matching

Direct and indirect cost	Costs
1 Direct Material	C
2 Direct Labor	A
3 Indirect Material	G
4 Indirect Labor	B, E
5 Other manufacturing overhead	D, F