Tuesday 24 July 2012

Listed below are costs found in various organizations. For each cost item, indicate whether it would

Listed below are costs found in various organizations. 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 cost or an indirect cost with respect to units of product.
                                             
Cost Item Variable or Fixed       Selling Cost       Administrative Cost        Direct         Indirect       
Ex. Direct labor Variable                    X             
Executive salaries Fixed     X     
Factory rent Fixed                  X    
1.  Depreciation, executive jet   Fixed correct   No correct   Yes correct   No correct   No correct
2.  Costs of shipping finished goods to customers   Variable correct   Yes correct   No correct   No correct   No correct
3.  Wood used in manufacturing furniture   Variable correct   No correct   No correct   Yes correct   No correct
4.  Sales manager’s salary   Fixed correct   Yes correct   No correct   No correct   No correct
5.  Electricity used in manufacturing furniture   Variable correct   No correct   No correct   No correct   Yes correct
6.  Secretary to the company president   Fixed correct   No correct   Yes correct   No correct   No correct
7.  Aerosol attachment placed on a spray can produced by the company   Variable correct   No correct   No correct   Yes correct   No correct
8.  Billing costs   Variable correct   Yes correct   Yes correct   No correct   No correct
9.  Packing supplies for shipping products overseas   Variable correct   Yes correct   No correct   No correct   No correct
10.  Sand used in manufacturing concrete   Variable correct   No correct   No correct   Yes correct   No correct
11.  Supervisor’s salary, factory   Fixed correct   No correct   No correct   No correct   Yes correct
12.  Executive life insurance   Fixed correct   No correct   Yes correct   No correct   No correct
13.  Sales commissions   Variable correct   Yes correct   No correct   No correct   No correct
14.  Fringe benefits, assembly line workers   Variable correct   No correct   No correct   Yes correct   Yes correct
15.  Advertising costs   Fixed correct   Yes correct   No correct   No correct   No correct
16.  Property taxes on finished goods warehouses   Fixed correct   Yes correct   No correct   No correct   No correct
17.  Lubricants for production equipment   Variable correct   No correct   No correct   No correct   Yes correct

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