GDS Seating Inc. makes seats for football, basketball, and soccer stadiums throughout the world. Which of the following is an example of a direct cost for this manufacturer?
A) office supplies for the corporate offices in South Carolina
B) direct mail advertising for the company's platform chairs with 1-inch thick foam cushioning
C) a publicity event in which GDS Seating donates seats to a new stadium being build at a historically black college
D) salary for the company's CEO
E) maintenance costs on the company's delivery trucks

Question

Quizplus · Accepted Answer

Direct costs are those that can be directly attributed to the production of a specific product or service. Direct mail advertising for the company's platform chairs with 1-inch thick foam cushioning is a direct cost because it is directly related to promoting a specific product that the company manufactures.