Question at position 12 [table]
Which of the following options correctly indicates how electricity used in a manufacturing of trucks would be classified? | | | | Direct Materials | Indirect Materials | Product Cost A. | No | Yes | No B. | No | Yes | Yes C. | Yes | No | No D. | No | No | Yes
[/table]CBAD

Question

Question at position 12 [table]
Which of the following options correctly indicates how electricity used in a manufacturing of trucks would be classified? |  |  |  | Direct Materials | Indirect Materials | Product Cost A. | No | Yes | No B. | No | Yes | Yes C. | Yes | No | No D. | No | No | Yes
[/table]CBAD

BlackTom AI · Accepted Answer

Question restatement: The problem asks which option correctly indicates how electricity used in the manufacturing of trucks would be classified, with three categories shown: Direct Materials, Indirect Materials, and Product Cost. Answer options map these three categories to Yes/No indicators, and we must determine which mapping matches electricity usage.

Option A: Direct Materials = No, Indirect Materials = Yes, Product Cost = No. This would imply electricity is not a direct material but is an indirect material, and it is not a product cost. In typical cost classifications, electricity used in manufacturing is not a directly traceable material to a specific unit (so not Direct Materials) and is not generally classified as an indirect material in the sense of material consumables; however, many treatments classify electricity as part of manufacturing overhead rather than as an indirect material. Additionally, if something is part of Product Cost, it should be included in the cost of goods manufactured. Here Product Cost is No, which would exclude electricity from the product cost, making this mapping inconsistent with standard manufacturing cost logic for overhead electricity.

Option B: Direct Materials = No, Indirect Materials = Yes, Product Cost = Yes. This states electricity is not a direct material, is treated as an indirect material, and is included as a product cost. The Yes for Product Cost aligns with the concept that manufacturing overhead costs (including electricity used in the plant) are included in the cost of producing the product. Labeling electricity as an indirect material, however, is a stretch since indirect materials are typically consumables that can be traced to a department or unit but not to a specific product; electricity is more commonly categorized as manufacturing overhead (a broader category) rather than an indirect material. Still, among the given options, this mapping assigns electricity to the product cost and to an indirect materials category.

Option C: Direct Materials = Yes, Indirect Materials = No, Product Cost = No. This would classify electricity as a direct material, which is inappropriate because electricity is not a material that becomes part of the final truck unit. Direct materials are components that become part of the product itself, and electricity does not enter the truck as a material part. Therefore this option conflicts with the fundamental definition of direct materials.

Option D: Direct Materials = No, Indirect Materials = No, Product Cost = Yes. Here electricity is not a direct material, not an indirect material, but is included as a product cost. This aligns with the common treatment of electricity as overhead cost allocated to products (i.e., part of manufacturing overhead that becomes part of the product cost). It does not misclassify electricity as a material and captures its role in the overall cost of production as a product cost.

Further reflections on conceptual fit:
- Direct Materials: should be tangible inputs that become part of the final truck. Electricity does not become part of the truck, so Direct Materials should be No.
- Indirect Materials: these are materials used in production that cannot be traced to a specific product. Electricity is typically considered manufacturing overhead rather than an indirect material, which makes this classification arguable and context-dependent. If a course or exam treats electricity strictly as overhead rather than an indirect material, then this option would be questionable.
- Product Cost: All manufacturing costs, including direct materials, direct labor, and manufacturing overhead, are included in product cost. Since electricity is a factory overhead cost, it would be included in the product cost.

In summary, the mappings that best reflect a standard accounting treatment for electricity used in manufacturing are those that exclude Direct Materials and place electricity in overhead/product-cost considerations. Option D fits that principle by assigning No to Direct Materials, No to Indirect Materials, and Yes to Product Cost, indicating that electricity contributes to the product cost without being categorized as a material. Option B also assigns Yes to Product Cost but adds Yes to Indirect Materials, which may overstate electricity’s placement as an indirect material versus overhead. Option A assigns Yes to Indirect Materials but No to Product Cost, which contradicts the idea that overhead costs like electricity are included in product cost. Option C incorrectly marks electricity as Direct Materials.

If you’re applying strict classroom definitions where electricity is treated as manufacturing overhead (not an indirect material), you would favor Option D. If a specific curriculum defines electricity as an indirect material for purposes of this question, Option B would be chosen. Compare with your course notes to verify which framing your instructor expects.

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