A. Commissions paid to sales personnel are a classic example of a period cost related to sales (non-manufacturing overhead). These costs are neither direct nor indirect production costs.
B. Machine repairs and maintenance in an automobile factory are a good example of factory overhead (indirect) costs.
C. Electricity in an electronics plant is a classic example of factory overhead (indirect) costs.
D. Direct costs are those that can be easily traced to the specific units of products. There are two main categories of direct costs: direct labor and direct materials. Direct labor costs are the costs of labor that may be directly traced to the production of a unit. Direct material costs are the materials that are directly put into the finished product. The costs included in the direct material cost are all of the costs associated with acquiring it - the item itself, shipping, insurance and taxes, among others. Common examples of direct materials are plastic, metal, tires and components. Thus, wood in a furniture factory is a direct cost.
