Alpha Manufacturing

Scenario: Classify Costs

Data:

• Direct Costs:
  • Raw Materials: $50,000
  • Direct Labor: $30,000

• Indirect Costs:
  • Factory Rent: $10,000
  • Supervision: $5,000

Requirements:

1. Classify each cost as either direct or indirect.
2. Calculate the total direct costs incurred by Alpha Manufacturing.
3. Calculate the total indirect costs incurred by Alpha Manufacturing.
4. Discuss the significance of distinguishing between direct and indirect costs for cost control and decision-making.