Mydas Ltd operates a large factory which manufactures three types of motor vehicles, including family sedans, sports cars and motorcycles. If the cost object is a family car, which of the following is an indirect cost?
A) The costs of wheels on the motorcycle
B) The salary of the factory general manager
C) The wages of the quality inspector whose job is to inspect each family car
D) The windscreen wipers on a family car

Question

Quizplus · Accepted Answer

The salary of the factory general manager is an indirect cost because it is not directly traceable to the production of a specific family car. This cost is incurred for the overall operation of the factory and benefits all products, not just the family cars.

Mydas Ltd Operates a Large Factory Which Manufactures Three Types