A chair manufacturer makes custom chairs using hand tools,wood,glue,and varnish.Which of the following statements is
A) The costs of wood and glue would be treated as direct costs.
B) Wood,glue,and varnish would all be direct materials.
C) Wood would be accounted for as a direct cost,and glue and varnish as indirect costs.
D) The concepts of direct and indirect costs are not applicable here.

Question

Quizplus · Accepted Answer

The cost object is the custom chairs.Direct costs,such as wood,can be traced to the custom chairs in a cost-effective manner.Indirect costs,such as glue and varnish,cannot be traced to the custom chairs in a cost-effective manner.

A Chair Manufacturer Makes Custom Chairs Using Hand Tools,wood,glue,and Varnish