Question $2$

Listed below are costs found in various organizations. For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold, and then whether it would be a selling cost, an administrative cost, or a product cost. If it is a product cost, indicate whether it would typically be treated as a direct or an indirect cost with respect to units of product. Three sample answers are provided for illustration:

Product Cost

Cost Item Variable or Fixed Selling Cost Administrative Cost Direct Indirect

Ex$.$ Direct labour Variable No No Yes No

Ex$.$ Executive salaries Fixed No Yes No No

$1.$ Depreciation, executive jet.

$2.$ Costs of shipping finished goods to customers.

$3.$ Wood used in manufacturing furniture.

$4.$ Sales manager$$s salary.

$5.$ Electricity used in manufacturing furniture.

$6.$ Salary of the secretary to the company president.

$7.$ Aerosol attachment placed on a spray can produced by the company.

$8.$ Costs of billing customers.

$9.$ Packing supplies for shipping products overseas.

$10.$ Sand used in manufacturing concrete.

$11.$ Supervisor$$s salary, factory.

$12.$ Executive life insurance.

$13.$ Sales commissions.

$14.$ Employee benefits, assembly$-$line workers.

$15.$ Advertising costs.

$16.$ Property taxes on warehouses used to store finished goods.

Answer rating: 100% (QA)

Here is the breakdown of the costs provided and their classification 1 Depreciation executive jet Variable or Fixed Fixed Selling Cost Administrative ... View the full answer