Question

Boca manufactures LX and RX stereo systems in Southern Ontario.

Boca incurs various costs both in producing these stereos and in the operations of the company.

Classify each of the following cost items according to the terms. A cost can be classified under more than one category. If in doubt, select the cost type based on whether the total costs will increase substantially if a large number of stereo systems are produced.

	Variable cost	Fixed cost	Direct cost	Indirect cost	Product cost	Period cost
Design of LX stereo
Plant Janitor
Machine Amortization
Factory maintenance

Answer 1

Indirect Cost Perid Cost Variable Cost Fixed Cost Direct Cost Yes Yes Product Cost Yes Yes Yes Yes Design of XL Stereo Plant Janitor Machine Amortization Factory Maintanance Yes Yes Yes Yes Yes Yes