Apple Inc. incurs the following costs for its iPhone production:
•Direct materials: $200 per unit
•Direct labor: $50 per unit
•Indirect labor: $20 per unit
•Factory rent: $10,000 per month
Required:
1.Classify the costs as direct or indirect.
2.Calculate the total direct and indirect costs for producing 1,000 units.
3.Discuss the importance of accurately distinguishing between direct and indirect costs.