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gibbs corporation makes indoor gas fireplaces. a standard fireplace includes unit-level materials, labor, and overhead costs. in addition, the company incurs product-level engineering and advertising costs. lastly, the company incurs facility-level costs related to renting the manufacturing building a sales representative has been in contact with a building developer who wants to buy 20 fireplaces only if he can buy them at amount lower than gibbs's selling price. which of the following costs would be relevant to this special order decision?

Answer :

okpalawalter8

The required costs  are:

  • Overhead expenses
  • Direct labor costs
  • Direct Material Cost
  • Direct Material Cost

What are the required costs?

Generally, Overhead expenses: Indirect expenses involved in running a firm are referred to as overhead expenses. They have nothing to do with making things or providing services. Direct costs are not included in them.

Any expense that is directly connected to the production of a good or the provision of a service is referred to as a direct cost. Direct costs may be broken down into direct labor, direct material costs, and direct expenditures.

Direct Material Cost: The price paid for the raw materials used in the manufacture of a thing is known as the direct material cost. The closing stock of materials is subtracted, together with purchases, purchase costs, and opening stock of materials.

Direct labor costs: These expenses are incurred when paying employees who directly contribute to the creation of the products or services that consumers get. The salaries, payroll taxes, and other benefits provided by the manufacturer are all included in the cost of direct labor.

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