Classification of Costs Papa’s Pizza Heaven serves take-out pizza from three locations in Columbus, Maryland. Papa’s considers each pizza delivered (even if the order is for two or more pizzas) as the cost object for the company. The company incurs the following costs:
1. Food costs including pizza dough, olive oil, tomato sauce, mozzarella cheese, mushrooms, bell peppers, Italian sausage, chopped fresh basil, pesto, pepperoni, onions, and ham
2. Salaries for drivers
3. Salaries for telephone operators
4. Salaries for cooks
5. Insurance for drivers
6. Utilities; water and electricity
7. Advertising
8. Discount coupons offered in local newspapers to attract customers
9. Food handling licenses, inspections, and fees
10. Accounting and payroll services
11. Cooking supplies
12. Cleaning supplies
13. Mortgage payments on the three locations owned by Papa’s Pizza Heaven
14. Insurance on facilities
Required
1. For each cost item, indicate whether it is fixed or variable relative to the cost object.
2. For each cost item, indicate whether it is a product or a period cost.
3. Which of the above costs could have potentially harmful environmental effects, and why?
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