Jurupa Ltd, a construction company based in Kondinin, Madron has been awarded a contract by the Cricket

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Question:

Jurupa Ltd, a construction company based in Kondinin, Madron has been awarded a contract by the Cricket World Cup Federation Committee to build the concrete stadium seats for the new stadium located in Fred Point, Durban. The company director, Bruce Gianni, has appointed Sujik Bratiko as the production manager with a salary of R100 000 per month. The concrete to manufacture each seat cost R55.00 per seat. Sujik has estimated that it would take 12 hours to make one seat in the production process at a wage rate of R296.00 per hour worked with a workforce of one hundred workers in the process. With all the labour hours being worked, the concrete mixers are estimated to lose R63 525 in value every year. The company had to spend an additional R362 565 for costs incurred to put sign boards at the different corners of the stadium informing the public that the company is manufacturing the seats for the new stadium, this is an excellent marketing tool for the company. The construction site requires a site office to be set up. ManStrong Container Rentals agreed to set up a container for the company in order to operate the office at a rate of R36 000 per month. The site will also employ, Thanda McNeil to do the administration work for the site office at a salary of R29 500 per month. As a result of expensive materials and equipment being kept at the site, the managers agreed that a security company must be contracted to guard all materials and equipment used in production. After a tender process, Shape Security had been awarded the contract which stated they would provide 2 24-hour armed guards per shift for a rate of R65 963 per month.

Required:

Identify all the costs involved from the information provided above, then classify the cost you have selected in terms of Cost Behaviour (Variable, Fixed or Mixed Cost) and then further classify the cost as either Product Cost (Manufacturing Cost) or Period Cost (Non-Manufacturing Cost).