Question 3: Cost terminology in manufacturing firms a) Direct materials Include O all materials and components O only major materials and components O only raw materials such as steel and glass Direct labor Includes only hourly production workers (aka assembly workers) O only managers who directly supervise the production process O all production labor including supervisors and maintenance staff Manufacturing overhead includes O only small items that are not worth tracing (e.g, glue, grease) only big items that cannot be traced (e.g., factory rent) O only non-manufacturing costs O both big items that cannot be traced (e.g., factory rent) and small items that are not worth tracing (e.g., glue, grease) b) Classity the following items as direct materials (OM), direct labor (DL), or manufacturing overhead (OH) for a car assembly plant: Rent for the factory building Cost of engines used in production DL ODM OOH Depreciation on production equipment ODL ODM COH Cost of lubricant used in production |DL -DM OH Production supervisor's salary Assembly workers' wages 0-12 points