Guaranteed Appliance Co. produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period were: corporate executives, $500,000; assembly-line workers, $180,000; security guards, $45,000; and plant supervisor, $110,000. The total of Guaranteed's direct labor cost was:
A) $110,000.
B) $180,000.
C) $155,000.
D) $235,000.
E) $735,000.

Question

Quizplus · Accepted Answer

Direct labor costs are those costs that can be directly traced to the production of goods. In this case, only the assembly-line workers' labor costs of $180,000 are directly involved in the production of washers and dryers, making it the direct labor cost.