EXERCISE 2-15 Classification of Costs as Variable or Fixed and as Product or Per

Question

EXERCISE 2-15 Classification of Costs as Variable or Fixed and as Product or Period [L02-3, LO2-4] Below are listed various costs that are found in organizations 1. Hamburger buns in a Wendy's outlet. 2. Advertising by a dental office. 3. Apples processed and canned by Del Monte 4. Shipping canned apples from a Del Monte plant to customers 5. Insurance on a Bausch & Lomb factory producing contact lenses. 6. Insurance on IBM's corporate headquarters. 7. Salary of a supervisor overseeing production of printers at Hewlett-Packard. 8. Commissions paid to automobile salespersons. 9. Depreciation of factory lunchroom facilities at a General Electric plant 10. Steering wheels installed in BMWs Required: Clasifty ach cot as being either variable or fhed with respet to the number of units produced and sold. Also classify each cost as either a selling and administrative cost or a product cost. Pre- pare your answer sheet as shown below. Place an X in the appropriate columns to show the proper classification of each cost. Period Selling and Administrative) Cost Cost Behavior Product Cost Cost Item Variable Fixed

Explanation / Answer

Cost Item Variable Fixed Period Product 1. Hamburger Buns in Wendy Outlet Variable Product 2. Advertising by dental clinic Fixed Period 3. Apples processed and canned by Del Monte Variable Product 4. Shipping Canned apples from Del Monte plant to customer Fixed Period 5. Insurance on Bausch and Lomb Factory producing contact lense Fixed Product 6. Insurance on Ibm Corporate Headquarter Fixed Period 7. Salary of Supervisor Overseeing production. Fixed Product 8. Commission paid to Automobile Salesperson Variable Period 9. Depreciation on Factory Lunchroom faciltiies Fixed Product 10. Steering Wheels n BMWs Variable Product

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