Question

Cost Classifications for a Service Company A partial list of The Grand Hotel’s costs follows: 1. What would be The Grand Hotel’s most logical definition for the final cost object? 2. Identify whether each of the costs is to be classified as direct or indirect. For purposes of classifying each cost as direct or indirect, use the hotel guest as the cost object. Costs Classification a. Cost to mail a customer survey b. Wages of convention setup employees c. Pay-per-view movie rental costs (in rooms) d. Cost of food e. Cost of room mini-bar supplies f. Training for hotel restaurant servers g. Cost to paint lobby h. Cost of laundering towels and bedding i. Champagne for guests j. Salary of the hotel manager k. Depreciation of the hotel l. Cost of valet parking m. Wages of bellhops n. Cost to replace lobby furniture o. Cost of advertising in local newspaper p. Wages of desk clerks q. Wages of maids r. Cost of new carpeting s. Guest room telephone costs for long-distance calls t. Cost of soaps and shampoos for rooms u. Utility cost v. Wages of kitchen employees w. General maintenance supplies

Answer 1

Answer: Cost Object is that to which the costs are assigned, it is often a product lines or customers or department for which costs are accumulated or measured by the management. - The Grand Hotel's most logical definition for the final cost object is Hotel Guest. Costs Classification a. Cost to mail a customer survey Direct b. Wages of convention setup employees Indirect c. Pay-per-view movie rental costs in rooms) Direct d. Cost of food Direct e. Cost of room mini-bar supplies Direct f. Training for hotel restaurant servers Indirect g. Cost to paint lobby Indirect h. Cost of laundering towels and bedding Direct i. Champagne for guests Direct lj. Salary of the hotel manager Indirect k. Depreciation of the hotel Indirect 1. Cost of valet parking Direct m. Wages of bellhops Indirect n. Cost to replace lobby furniture Indirect 0. Cost of advertising in local newspaper Indirect p. Wages of desk clerks Indirect q. Wages of maids Indirect r. Cost of new carpeting Indirect s. Guest room telephone costs for long-distance calls Direct t. Cost of soaps and shampoos for rooms Direct u. Utility cost Indirect v. Wages of kitchen employees Indirect w. General maintenance supplies Indirect