Your sister turned her hobby into a small business called Glazed Over. She is a potter and manufactures and sells bowls that can be used for decoration or for birdbaths. She has one employee who works 40 hours a week no matter how many bowls are made. She has asked your advice in developing a cost function for the bowls so that she can estimate costs for the next period.

The following list of costs comes from your sister’s general ledger. Assume the cost object is an individual unit (i.e., bowl). Categorize each cost as direct or indirect (D or I), and as fixed, variable, or mixed (F, V, or M).
A. Employee wages
B. Clay used to make bowls
C. Depreciation on the kilns
D. Glaze (the finish painted on the bowls)
E. Brushes for the glaze
F. Electricity
G. Business license
H. Advertising
I. Pottery studio maintenance (cost of weekly cleaning service)
J. Packing materials for the bowls

  • CreatedJanuary 26, 2015
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