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Classifying Cost Items

Classify the cost items as direct or indirect , fixed or variable.

Cost Item D or I F or V
a. Salary of the production department manager who oversees
manufacturing.

b. Salaries of company founders.

C. Cardboard trays used to package sets of 12 specialty
biscuits.
d. Salary of the Web graphics designer who prepares the online
illustrations and layout.
e. Annual maintenance service agreement for the conveyor belt.
f. Wages paid to assembly line workers who mix ingredients
in batches.
g. Utilities such as water, electricity, waste for the warehouse.
h. Cost of ingredients

The company sells dog cookies to Wal-Mart to sell in their stores,
is this considered a period cost or an inventoriable cost? What costs
can Wal-Mart include as part of the purchase cost?

Solution Preview

Classify the cost items as direct or indirect , fixed or variable.

Cost Item D or I F or V
a. Salary of the production department manager who oversees
manufacturing.
Indirect and Fixed

b. Salaries of company ...

Solution Summary

This solution illustrates how to classify costs as direct, indirect and as fixed or variable.

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