What type of cost is direct labor?

• A. Sunk cost
• B. Direct cost
• C. Indirect cost
• D. Period cost

Answer: (B)

Verified step by step guidance

1. Understand the definition of direct labor: Direct labor refers to the wages paid to workers who are directly involved in the production of goods or services. These costs can be directly traced to specific products or jobs.
2. Review the concept of direct costs: Direct costs are expenses that can be directly attributed to a specific product, service, or job. Examples include direct materials and direct labor.
3. Differentiate between the other cost types: Sunk costs are past costs that cannot be recovered, indirect costs are expenses that cannot be directly traced to a specific product, and period costs are costs that are expensed in the period they are incurred and are not tied to production.
4. Match direct labor to the correct cost type: Since direct labor can be directly traced to the production of goods or services, it falls under the category of direct costs.
5. Conclude that direct labor is classified as a direct cost based on its traceability to specific products or jobs.