ABC Manufacturing wants to determine whether its various product costs are direct or indirect, and variable or
Question:
ABC Manufacturing wants to determine whether its various product costs are direct or indirect, and variable or fixed. This information will be used to determine product unit costs. All employees are guaranteed a 40-hour work-week except factory employees, who are paid an hourly wage and can be sent home when there is no work. The
following classification scheme has been developed:
A. Direct variable cost
B. Indirect variable cost
C. Direct fixed cost
D. Indirect fixed cost
Using the categories shown above, indicate how each of the following costs should be classified if the cost object is a single unit of product:
Labor in the maintenance department
Glue and tacks used in production
Lubricating oil for production machine
Salary of the plant accountant
Oil used for monthly preventive maintenance on production machines
Insurance on the plant machinery
Hourly factory wages
Wages in the materials receiving and handling department
Taxes on plant equipment
Shipping costs for direct materials
Auditing A Practical Approach
ISBN: 9780730382645
4th Edition
Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton