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20 August, 22:54

If a frozen pizza plant is the cost object, classify each of the following costs as direct or indirect, respectively: pizza ingredients, cafeteria workers wages, and janitorial supplies.

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  1. 20 August, 23:55
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    Pizza ingredients - Direct Costs

    Cafeteria workers wages - Direct Costs

    Janitorial supplies - Indirect Costs

    Explanation:

    By definition, Direct costs are costs that are specifically traceable to the product or service while Indirect costs are costs that are not incurred solely for the product or service but are necessary for production. but they are not traceable to the act of production. Indirect costs are those necessary to keep your business in operation.

    If a frozen pizza plant is the cost object, then

    1. Pizza ingredients will definitely be incurred specifically for pizza production and hence be classified as direct costs,

    2. Cafeteria workers wages are incurred solely for the production of Pizza unless in the event where they produce many products then it will be apportioned but in this case they are direct costs because they are directly traceable to Pizza production

    3. Janitorial supplies are indirect because they are only necessary to keep the business in operation.
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