California Tires manufactures two types of tires that it sells as wholesale products to various specialty...

 

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California Tires manufactures two types of tires that it sells as wholesale products to various specialty retail auto supply stores. Each tire requires a three-step process. The first step is mixing. The mixing department combines some of the necessary direct materials to create the material mix that will become part of the tire. The second step includes the forming of each tire where the materials are layered to form the tire. This is an entirely automated process. The final step is finishing, which is an entirely manual process. The finishing department includes curing and quality control. 1. Costs involved in the process are listed next. For each cost, indicate whether it is a direct variable, direct fixed, indirect variable, or indirect fixed cost, assuming "units of production of each kind of tire" is the cost object. Costs: Mixing department manager Material handlers in each department Custodian in factory Night guard in factory Machinist (running the mixing machine) Machine maintenance personnel in each department Maintenance supplies for factory Rubber Reinforcement cables Other direct materials Depreciation on formers Depreciation on mixing machines Rent on factory building Fire insurance on factory building Factory utilities Finishing department hourly laborers Cleaning supplies for factory Machinist (running the forming machines) 2. If the cost object were the "mixing department" rather than units of production of each kind of tire, which preceding costs would now be direct instead of indirect costs? California Tires manufactures two types of tires that it sells as wholesale products to various specialty retail auto supply stores. Each tire requires a three-step process. The first step is mixing. The mixing department combines some of the necessary direct materials to create the material mix that will become part of the tire. The second step includes the forming of each tire where the materials are layered to form the tire. This is an entirely automated process. The final step is finishing, which is an entirely manual process. The finishing department includes curing and quality control. 1. Costs involved in the process are listed next. For each cost, indicate whether it is a direct variable, direct fixed, indirect variable, or indirect fixed cost, assuming "units of production of each kind of tire" is the cost object. Costs: Mixing department manager Material handlers in each department Custodian in factory Night guard in factory Machinist (running the mixing machine) Machine maintenance personnel in each department Maintenance supplies for factory Rubber Reinforcement cables Other direct materials Depreciation on formers Depreciation on mixing machines Rent on factory building Fire insurance on factory building Factory utilities Finishing department hourly laborers Cleaning supplies for factory Machinist (running the forming machines) 2. If the cost object were the "mixing department" rather than units of production of each kind of tire, which preceding costs would now be direct instead of indirect costs?

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Costs Classification Explanation Direct Variable It related directly to the cost of production and v... View the full answer