Manufacturing costs can be divided into three categories: direct materials, direct labor, and which of the following?

• A. Administrative expenses
• B. Indirect revenues
• C. Manufacturing overhead
• D. Selling expenses

Answer: (C)

Verified step by step guidance

1. Understand the three main categories of manufacturing costs: direct materials, direct labor, and manufacturing overhead. These are costs directly associated with the production process.
2. Direct materials refer to raw materials that are directly used in the production of goods, such as wood for furniture or fabric for clothing.
3. Direct labor includes wages paid to workers who are directly involved in the manufacturing process, such as assembly line workers.
4. Manufacturing overhead encompasses all indirect costs related to production, such as factory rent, utilities, equipment depreciation, and salaries of supervisors. These costs cannot be directly traced to specific products.
5. Administrative expenses, selling expenses, and indirect revenues are not part of manufacturing costs. They are categorized separately as period costs or non-manufacturing costs.