Omega Manufacturing

Scenario: Classify Costs

Data:

• Direct Costs:
  • Raw Materials: $60,000
  • Direct Labor: $40,000

• Indirect Costs:
  • Factory Rent: $15,000
  • Supervision: $8,000

Requirements:

1. Classify each cost as either direct or indirect.
2. Calculate the total direct costs incurred by Omega Manufacturing.
3. Calculate the total indirect costs incurred by Omega Manufacturing.
4. Discuss the impact of direct and indirect costs on product pricing decisions.