Cost Classification
Listed below are costs found in various organizations.
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. Secretary to the company president.
7. Aerosol attachment placed on a spray can produced by the company.
8. Billing costs.
9. Packing supplies for shipping products overseas.
10. Sand used in manufacturing concrete.
II . Supervisor's salary. factory.
12. Executive life insurance.
13. Sales commissions.
14. Fringe benefits, assembly-line workers.
15. Advertising costs.
16. Property taxes on finished goods warehouses.
17. Lubricants for production equipment.
Required:
Prepare an answer sheet with column headings as shown below. 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 manufacturing cost. If it is a manufacturing cost. indicate whether it would typically be treated as a direct or indirect cost with respect to units of product. Three sample answers are provided for illustration.
| Manufacturing (Product)Cost | ||||
Cost Item | Variable or Fixed | Selling Cost | Administrative Cost | Direct | Indirect |
Direct labour | V |
|
| X |
|
Executive Salaries | F |
| X |
|
|
Factory rent | F |
|
|
| X |
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