A manufacturing plant produces two product lines: football equipment and cricket equipment.Direct costs for the football equipment line are the:

Question

Quizplus · Accepted Answer

Direct costs are costs that can be clearly identified with a specific product or service. Monthly lease payments for a specialized piece of equipment needed to manufacture the football helmet is a cost that can be directly traced to the production of the football equipment line. Salaries of the clerical staff that work in the company administrative offices and beverages provided daily in the plant break room are not directly related to the production of the football equipment line. Utilities paid for the manufacturing plant may be partially allocated to the football equipment line, but this cost is likely shared between both product lines and other operational activities of the plant.

A Manufacturing Plant Produces Two Product Lines: Football Equipment and Cricket