Exercise -2: Cost Classifications

Nation Lovers PLC manufactures furniture including tables. Selected costs associated

with the manufacturing of the tables and the general operations of the company are

given below. Match the following two groups.

Group A: Cost Items

1) The tables are made of wood that costs $100

per table

2) The tables are assembled by workers, at a

wage cost of $440 per table

3) Workers assembling the table are supervised

by a factory supervisor who is paid $25,000

per year

4) Electrical costs are $2 per machine- hours.

Four machine-hours are required to produce a

table

5) The department cost of machine used to make

the tables $10,000 per year

6) The salary of the president of porter Company

is $100,000 per year

7) Porter Company spends $250, 000 per year to

advertise its products.

8) Sales persons are paid a commission of $30

for each table sold

9) Instead of producing the tables, porter

Company could rent its factory space out at a rental income of $50,000 per year

Group B: Cost Classification

a) Variable cost

b) Fixed cost

c) Period cost

d) Selling and administrative

e) Direct labor

f) Sunk cost

g) Product cost

h) Manufacturing

i) Non manufacturing

j) Direct material

k) MOH

l) Opportunity cost

Page