The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company. Required: For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. 1. The cost of a hard drive installed in a computer.

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Business

Hanson

20 July, 08:56

The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company. Required: For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. 1. The cost of a hard drive installed in a computer.

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Ezekiel Case · Answer 1

1. The cost of a hard drive installed in a computer = Direct Material Cost

Explanation:

Direct Material relates to the basic inputs required to make the final good.

Here, for the information it is provided that, PC Works assembles custom computers, which are supplied by various manufacturers.

Since the main business of PC Works is to assemble the computers, installing a hard disk will be the main component of service, thus, It is part of direct material.