An acquisition cost of raw material is to be used in the manufacturing, and becoming a component of cost object is classified as _________?
Correct answer: A. direct material costs
- A. direct material costs
- B. indirect material costs
- C. direct labor costs
- D. indirect labor costs
Explanation
Raw material that can be specifically traced to the manufactured product becomes part of the cost object, so it is a direct material cost. Material used generally in production, such as factory supplies, would be indirect material.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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