BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Royalties
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Production Wages
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Depreciation of Factory Machinery
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Factory Insurance
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Detailed explanation-1: -Direct costs are the expenses associated explicitly with a business’ operations. For example, labor, materials and fuel are typically direct costs because they tangibly contribute to production.
Detailed explanation-2: -Q: How do we treat wages in business-as direct or indirect expenses? Ans: We take wages as a direct expense.
Detailed explanation-3: -Depending on the business you run, wages or salaries may also be viewed as direct expenses. Direct expenses are most often variable costs. These costs will fluctuate should you produce more or fewer products at any given time. The direct expense will be about the quantities produced.
Detailed explanation-4: -The cost of labor is broken into direct and indirect (overhead) costs. Direct costs include wages for the employees that produce a product, including workers on an assembly line, while indirect costs are associated with support labor, such as employees who maintain factory equipment.