Direct costs trace to specific products

Steps:

• Identify direct costs as those directly attributable to producing a specific item, like labor or materials for electric motors.
• Review options: Assembly wages link to motor assembly; factory rent, depreciation, and commissions do not tie directly to individual motors.
• Classify assembly wages as direct labor, essential for production.
• Eliminate indirect costs (overhead) and non-production expenses.

Why A is correct:

• Direct labor, such as assembly workers' wages, is traceable to the specific electric motors produced, per cost accounting definitions.

Why the others are wrong:

• B: Factory rent is indirect overhead, allocated across all production, not traceable to one motor.
• C: Machinery depreciation is indirect, shared among multiple products as factory overhead.
• D: Sales persons' commission is a selling expense, unrelated to manufacturing costs.

Final answer: A