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2 years ago

Salaries of managers and maintenance personnel are examples of ______ labor costs.

Business

1 answer:

Inessa05 [86]2 years ago

5 0

Salaries of managers and maintenance personnel are examples of indirect labor costs.

What is the difference between direct and indirect labor costs?

Direct labor costs are traceable directly to the finished goods produced whereas the indirect labor costs such as the salaries of managers and maintenance personnel are good examples of indirect labor costs since their efforts cannot be traced to finished goods.

There is a need to determine direct labor costs, because indirect labor costs are not prime cost, which are used in determining the contribution per unit

Find out more about labor costs on:brainly.com/question/24303619

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Full question with options:

Salaries of managers and maintenance personnel are examples of ______ labor costs. a) indirect b) direct.

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Answer: please refer to the explanation section

Explanation:

Design A

Initial cost $2500 000

operating and maintenance cost = $800 000

Overhauls = $1250000 in 5 years

R = 5%

PV= overhaul cost/(1+r)^n + maintenance cost(1 -(1+r)^-5)/r

PV = 1250000/(1 + 0.05)^5 + 800000(1 - (1 + 0.05)^-5)/0.05

PV = 979407.71 + 3463581.34 = 4442989.05

costs to be capitalized = present value of overhaul costs = 979407. 71

Design A will be valued at = 2500000 + 979407. 71 = 347907.71

Total cost of Choosing Design A = 979407.71 + 3463581.34 + 2500000

Total cost of Choosing Design A = 6942989.05

Design B

initial cost = $5750000

Operating and Maintenance = $600000

Overhauls = $3000000 in 10 years

PV= overhaul cost/(1+r)^n + maintenance cost(1 -(1+r)^-5)/r

PV = 3000000/(1 + 0.05)^10 + 600000(1 - (1 + 0.05)^-10)/0.05

PV = 1841739.76 + 4633040.96 = 6474780.72

Cost to be capitalized = overhaul cost = 1841739.76

Design B will be value at = 1841739.76 + 5750000 = 7591739.76

Total cost of costs Design B = 1841739.76 + 5750000 + 4633040.96

Total cost of costs Design B = 12224780.72

Design B involves more costs than Design A. Present value for total cost for choosing Design B is Higher than the present value for Total costs of choosing Design A

Choose Design A

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