Which of the following is an example of direct labor cost for a cell phone manufacturer?

• A. Cost of raw materials used in manufacturing cell phones
• B. Depreciation expense on factory equipment
• C. Wages paid to assembly line workers who install components in cell phones
• D. Salary of the factory manager overseeing production

Answer: (C)

Verified step by step guidance

1. Understand the concept of direct labor cost: Direct labor cost refers to the wages paid to workers who are directly involved in the production process of a product. These costs are traceable to specific units of production.
2. Analyze the options provided: Review each option to determine whether it represents a cost directly tied to the production process or not.
3. Option 1: 'Cost of raw materials used in manufacturing cell phones' - This is not direct labor cost; it is classified as direct material cost because it pertains to the physical materials used in production.
4. Option 2: 'Depreciation expense on factory equipment' - This is not direct labor cost; it is considered an indirect cost or overhead because it is not directly tied to the labor involved in production.
5. Option 3: 'Wages paid to assembly line workers who install components in cell phones' - This is direct labor cost because these workers are directly involved in the production process. Option 4: 'Salary of the factory manager overseeing production' - This is not direct labor cost; it is considered an indirect cost or overhead because the manager is not directly involved in the physical production of cell phones.