Answer (B) is correct . Direct labor costs are wages paid to labor that can be specifically identified with the production of finished goods. Because the wages of a factory machine operator are identifiable with a finished product, the wages are a direct labor cost. Because a supervisor’s or vice-president’s salary is not identifiable with the production of specific finished goods, it is not a direct labor cost.
Answer (A) is incorrect because Only the wages paid to the machine operator are directly identifiable with the production of specific finished goods.
Answer (C) is incorrect because Only the wages paid to the machine operator are directly identifiable with the production of specific finished goods.
Answer (D) is incorrect because Only the wages paid to the machine operator are directly identifiable with the production of specific finished goods.
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