A plant manager’s salary is: A) a direct cost and an indirect cost B) a direct…
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Question “A plant manager’s salary is: A) a direct cost and an indirect cost B) a direct…”
A plant manager’s salary is:
A) a direct cost and an indirect cost
B) a direct cost
C) an indirect cost
D)a period cost
Answer
Salary of the plant manager: The plant manager is an employee of the company. He or she oversees production and looks after all aspects of the manufacturing process. For services rendered by the plant manager, the company pays him salary. The salary of the plant manager is included in the company’s manufacturing overhead.
Period costs: These are additional production costs. These costs can include selling and administrative costs that are not incurred in order to produce the goods. These period costs can be either fixed or variable.
Direct costs: These are costs that are directly related to the production and shipping of goods. If the company doesn’t produce the goods, these costs can be avoided.
Indirect manufacturing cost: These are costs incurred to manufacture the product that are not directly related to it but are necessary to complete production.
Period costs include office and selling expenses. The plant manager’s wage is for manufacturing purposes. Because the plant manager oversees the manufacturing process, the salary of the plant manager is manufacturing overhead.
Therefore, the salary of a plant manager is not based on period costs.
Direct costs refer to the costs directly associated with producing the goods. This would include direct labor costs as well as direct material costs. The salary of the plant manager does not directly relate to the production of goods. This is because the goods can only be made with direct materials and direct labor.
Therefore, the salary of a plant manager is not a direct cost but an indirect cost of production.
Ans:
The salary of a plant manager is the indirect cost of production.
Conclusion
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