Tp2.
lo 2.2this list contains costs that various organizations incur; they fall into three categories: direct materials (dm), direct labor (dl), or overhead (oh).7

classify each of these items as direct materials, direct labor, or overhead.

glue used to attach labels to bottles containing a patented medicine.
compressed air used in operating paint sprayers for student painters, a company that paints houses and apartments.
insurance on a factory building and equipment.
a production department supervisor’s salary.
rent on factory machinery.
iron ore in a steel mill.
oil, gasoline, and grease for forklift trucks in a manufacturing company’s warehouse.
services of painters in building construction.
cutting oils used in machining operations.
cost of paper towels in a factory employees’ washroom.
payroll taxes and fringe benefits related to direct labor.
the plant electricians’ salaries.
crude oil to an oil refinery.
copy editor’s salary in a book publishing company.

assume your classifications could be challenged in a court case. indicate to your attorneys which of your answers for part a might be successfully disputed by the opposing attorneys and why. in which answers are you completely confident?