(Direct vs. indirect costs) Modern Cutlery Inc. manufactures kitchen knives. Following are some costs incurred in the factory in 1997 for knife production:

a. What is the direct material cost for 1997?

b. What is the direct labor cost for 1997?

c. What is the indirect material and total indirect labor overhead cost for 1997?
35.(Direct vs. indirect costs) Mountain State University’s College of Business has five departments: Accounting, Finance, Management, Marketing, and Decision Sci¬ ences. Each department chairperson is responsible for the department’s budget preparation. Indicate whether each of the following costs incurred in the Mar¬ keting Department is direct or indirect to the department:

a. Chairperson’s salary

b. Cost of computer time of campus mainframe used by members of the department

c. Marketing faculty salaries

d. Cost of equipment purchased by the department from allocated state funds

e. Cost of travel by department faculty paid from externally generated funds contributed directly to the department

f. Cost of secretarial salaries (secretaries are shared by the entire college)
g. Depreciation allocation of the college building cost for the number of offices used by department faculty h. Cost of periodicals/books purchased by the department.LO1

Transcribed Image Text:

MATERIAL COSTS Stainless steel $400,000 Equipment oil and grease 8,000 Plastic and fiberglass for handles 15,000 Wooden knife racks for customer storage 9,200 LABOR COSTS Equipment operators $200,000 Equipment mechanics 50,000 Factory supervisors 118,000