Which of the following costs would be classified as a direct cost for a company that produces motorcycles?
A) Rent of manufacturing facility that produces motorcycles.
B) Seats used in the motorcycles.
C) Wages of motorcycle assembly workers.
D) Both seats used in the motorcycles and wages of motorcycle assembly workers are correct.

Question

Quizplus · Accepted Answer

Direct costs are costs that are directly attributable to a specific product or service. Seats used in the motorcycles and wages of motorcycle assembly workers are both direct costs since they are directly related to the production of motorcycles. Rent of manufacturing facility that produces motorcycles is an indirect cost since it is not directly related to the production of motorcycles but rather to the facility in which they are produced.

Which of the Following Costs Would Be Classified as a Direct