Which of the Following Is an Example of Direct Materials

question 247

Multiple Choice

Which of the following is an example of direct materials cost for an automobile manufacturer?

• A) cost of oil lubricants for factory machinery
• B) cost of wages of assembly worker
• C) salary of production supervisor
• D) cost of interior upholstery

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Definitions:

Variable Production Costs

Expenses that change in direct proportion to the level of production output.

Cost-Volume-Profit Analysis

An accounting method used to determine how changes in costs and volume affect a company's operating income and net income.

Contribution Format

An income statement format that separates fixed and variable costs, showing the contribution margin which covers fixed costs and profits.

Absorption Costing

A bookkeeping strategy that encompasses all production expenses, including direct materials, direct labor, and variable plus fixed overhead, into the pricing of a product.