Classification of costs, manufacturing sector. The Kitakyushu, Japan, plant of Nissan Motor Corporation assembles two types of cars (Teanas and Muranos). Separate assembly lines are used for each type of car.
Classify each cost item (A–H) as follows:
a. Direct or indirect (D or I) costs for the total number of Teanas assembled.
b. Variable or fixed (V or F) costs depending on how total costs change as the total number of Teanas assembled changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the total number of Teanas assembled.) You will have two answers (D or I; V or F) for each of the following items:
Cost Item D or I V or F
A. Cost of tires used on Teanas
B. Salary of public relations manager for Kitakyushu plant
C. Annual awards dinner for Teana suppliers
D. Cost of lubricant used on the Teana assembly line
E. Freight costs of Teana engines shipped from Yokohama to Kitakyushu
F. Electricity costs for Teana assembly line (single bill covers entire plant)
G. Wages paid to temporary assembly-line workers hired in periods of high Teana production (paid on hourly basis)
H. Annual fire-insurance policy cost for Kitakyushu plant
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