15 terms

Cost Classification

Instructions: Classify each as a fixed cost, variable cost, mixed cost, or none. Also, determine if the cost is a direct product cost, indirect product cost, or period cost.
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Shoelaces for a shoe manufacturer.
Variable cost
Direct product cost
Depreciation on administration furniture calculated using the double-declining balance method.
Fixed cost
Period cost
Depreciation on administration furniture calculated using the straight-line method.
Fixed cost
Period cost
Depreciation on factory equipment calculated using the double-declining balance method.
Fixed cost
Indirect product cost
Depreciation on factory equipment calculated using the straight-line method.
Fixed cost
Indirect product cost
Steak for a restaurant.
Variable cost
Direct product cost
Assembly line workers salary.
Fixed cost
Direct product cost
Utilities for the month of August for a factory located in Arizona.
Mixed cost
Indirect product cost
Salary of a security person working at the factory.
Fixed cost
Indirect product cost
Salary of a security person working in the sales building.
Fixed cost
Period cost
Fuel for an airline.
Variable cost
Direct product cost
Sales force compensation that include a base salary and commission based on sales.
Mixed cost
Period cost
Income tax expense
None - while it may seem intuitive that income tax expense would be a variable cost. We only classify cost of goods sold and operating expenses as fixed, variable, or mixed.
Period cost
Property tax expense
Fixed cost
Period cost
Wood for a furniture manufacturer.
Variable cost
Direct product cost