Classifying Costs in Accounting
Which costs are classified as Product (direct/indirect) or Period and Variable, Fixed, or Mixed?
1. Wages of assembly line workers: - Product cost: Direct cost, as it can be specifically traced to the production of goods. - Variable cost, as it varies with the level of production. 2. Depreciation of plant equipment: - Product cost: Indirect cost, as it cannot be directly traced to specific units of production. - Fixed cost, as it does not vary with the level of production. 3. Glue and nails for production: - Product cost: Direct cost, as it can be specifically traced to the production of goods. - Variable cost, as it varies with the level of production. 4. Outbound delivery expenses: - Period cost: Indirect cost, as it cannot be directly traced to specific units of production. - Variable cost, as it may vary based on the volume or distance of deliveries. 5. Raw materials handling cost: - Product cost: Indirect cost, as it cannot be directly traced to specific units of production. - Variable cost, as it may vary with the volume or type of raw materials being handled. 6. Production run setup costs: - Product cost: Indirect cost, as it cannot be directly traced to specific units of production. - Mixed cost, as it includes both fixed costs (e.g., setup equipment) and variable costs (e.g., labor for setup). 7. Administrative office utilities: - Period cost: Indirect cost, as it cannot be directly traced to specific units of production. - Fixed cost, as it does not vary with the level of production. 8. Electricity cost of retail stores: - Period cost: Indirect cost, as it cannot be directly traced to specific units of production. - Mixed cost, as it includes both fixed costs (e.g., basic electricity supply) and variable costs (e.g., additional usage during peak hours). 9. Research and development expense: - Period cost: Indirect cost, as it cannot be directly traced to specific units of production. - Fixed cost, as it does not vary with the level of production. 10. Salary of marketing manager: - Period cost: Indirect cost, as it cannot be directly traced to specific units of production. - Fixed cost, as it does not vary with the level of production. It's important to note that cost classification can vary depending on the context and industry. The given classifications are based on general assumptions and may differ in specific scenarios.