Costs are either direct or indirect depending on whether they can be traced to a cost object, and are either variable or fixed depending on whether they vary with changes in volume. Classify each of the following as direct (D) or indirect (I) with respect to a product as the cost object and as variable (V) or fixed (F). For each of the 10 items you will have two answers, D or I and V or F.
1. Factory rent
2. Salary of a factory storeroom clerk
3. Cement for a road builder
4. Supervisor training program
5. Abrasives (e.g., sandpaper)
6. Cutting bits in a machinery department
7. Food for a factory cafeteria
8. Workers’ compensation insurance in a factory
9. Steel scrap for a blast furnace
10. Paper towels for a factory washroom

  • CreatedNovember 19, 2014
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