Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 39

“Materials and labor are always direct costs, and supply costs are always indirect.” What is your opinion of this statement?

Step 1 of 3

Direct cost: -

The term “direct cost”, is also known as prime cost it include following items direct material, direct labor and direct expenses.

Direct material: -

The term “direct material”, means which can identify in final product.

Direct labor: -

The term “direct labor”, means that cost wages paid to direct labor which converting the raw material into furnished product. Costs connected with labor involved in manufacturing events.

Direct expenses: -