Lake Appliance 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 Lake'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 cost only includes the wages and salaries of production workers who handle the assembly-line process. Therefore, the correct direct labor cost is only $180,000. The other costs such as corporate executives, security guards, and plant supervisors are indirect labor costs.

Lake Appliance Produces Washers and Dryers in an Assembly-Line Process