The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company. Required:
For each cost, indicate whether it would most likely be classified as direct labor, direct materials, manufacturing overhead, selling, or an administrative cost. (You may select more than one answer. Boxes left with question marks will be graded as incorrect.)
1. cost of hard drive installed on computer: Direct materials cost
2. the cost of advertising in the Puget Sound computer user newspaper: marketing and selling cost
3. the wages of employees who assmble computers from components: direct labor cost
4. sales commissions paid to the company's salespeople: marketing and selling cost
5. the wages of the assembly shop's supervisor: manufacturing overhead cost
6. the wages of the company's accountant: administrative cost
7 depreciation on equipment used to test assembled computers before release to customers: manufacturing overhead cost
8. rent on the facility in the industrial park: manufacturing overhead cost, marketing and selling cost, administrative cost