Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 35

Cost classifications For each of the following costs, check the columns that most likely apply (both variable and fixed might apply for some costs).

Step 1 of 3

Cost classification:

Direct costs:

Direct costs are incurred by the firm in production of goods such as direct material, direct wages towards labor and manufacturing overhead.

Indirect costs:

Indirect costs are incurred by the firm that cannot directly trace the material in the products manufactured but they are essential for production.