Question

Which costs are correlated with the firm’s sales and include the costs of labor, raw materials, and sales commissions?

a. fixed
b. flotation
c. variable
d. direct

Answer 1

The correct answer is letter "B": direct.

Step-by-step explanation:

Direct Costs for finished goods refer to the items and services directly used in production. Other costs such as rent and insurance for the production site are indirect costs. Examples of direct costs are direct labor and materials, manufacturing supplies or even commissions out of sales.