Question

Newtech Inc. hires John for the position of a software programmer to work on their new project. Salary paid to John by Newtech Inc. would be an example of which type of costs?

Answer 1

Answer:

Direct Cost.

Explanation:

As Newtech Inc. has hired John for the position of a software programmer to work on their new project. Salary paid to John by Newtech Inc. would be direct cost. Direct costs are the costs which can be tied directly to the manufacturing of products and services and they can be traced very easily as well. Labor cost, commissions, manufacturing supplies, direct material are the direct costs which can traced back to the manufacturing products quite easily.