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 those costs that can be directly traced to the production of a specific product. In this scenario, the wages of motorcycle assembly workers and the cost of seats used in the motorcycles are both directly related to the production of motorcycles, which makes them direct costs. Rent of the manufacturing facility, on the other hand, would be classified as an indirect cost, as it cannot be directly traced to the production of a specific motorcycle.

Which of the Following Costs Would Be Classified as a Direct