Question 2 Listed below are costs found in various organizations. For each cost item, indicate whether it
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Listed below are costs found in various organizations. For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold, and then whether it would be a selling cost, an administrative cost, or a product cost. If it is a product cost, indicate whether it would typically be treated as a direct or an indirect cost with respect to units of product. Three sample answers are provided for illustration:
Product Cost
Cost Item Variable or Fixed Selling Cost Administrative Cost Direct Indirect
Ex Direct labour Variable No No Yes No
Ex Executive salaries Fixed No Yes No No
Depreciation, executive jet.
Costs of shipping finished goods to customers.
Wood used in manufacturing furniture.
Sales managers salary.
Electricity used in manufacturing furniture.
Salary of the secretary to the company president.
Aerosol attachment placed on a spray can produced by the company.
Costs of billing customers.
Packing supplies for shipping products overseas.
Sand used in manufacturing concrete.
Supervisors salary, factory.
Executive life insurance.
Sales commissions.
Employee benefits, assemblyline workers.
Advertising costs.
Property taxes on warehouses used to store finished goods.
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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