Question 1: Below are listed various costs that are found in organizations.

1. Burger buns in a Mc Donalds outlet.

2. Advertising by a Altamash Dental Clinic.

3. Apples processed and canned by Del Monte.

4. Shipping canned apples from a Del Monte plant to customers.

5. Insurance on a Pepsi Co. factory.

6. Insurance on IBMs corporate headquarters.

7. Salary of a supervisor overseeing production of books at McGraw-Hill.

Required:

Classify each cost as being either variable or fixed with respect to the number of units produced

and sold. Also classify each cost as either a selling and administrative cost or a product cost.

Prepare your answer sheet as shown below. Write YES in the appropriate columns to show the proper classification of each cost. The first one has been done for you.

Item

Cost Behavior		Selling and Administrative cost	Product Cost
Variable	Fixed
1	Yes			Yes