Answer (A) is correct . Direct costs may be defined as those that can be specifically associated with a single cost object and can be assigned to it in an economically feasible manner. Wages paid to labor that can be identified with a specific finished good are direct costs. Value-adding costs may be defined as the costs of activities that cannot be eliminated without reducing the quality, responsiveness, or quantity of the output required by a customer or by an organization. Clearly, the amounts paid to programmers add value to computer programs.
Answer (B) is incorrect because The activities performed by programmers add value to computer programs. Therefore, the payments to employees who develop these programs is considered a value-adding cost.
Answer (C) is incorrect because Payments to programmers are both direct costs and value-adding costs of computer programs.
Answer (D) is incorrect because Wages paid to labor that can be identified with a specific finished good are direct costs. Therefore, payments to employees who develop computer programs is a direct cost.
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