Cost BehaviorScooby's Pet Food Corp. produces dog treats for our furry friends. Listed below are selected cost items for the treat production. Classify each cost as either fixed or variable, and either a product or a period cost by placing an x in the appropriate boxes. Cost by behaviorCost by function VariableFixedProductPeriodPeanut butter for treats………… Baking labor................................. Factory property taxes……………. Human Resources staff salaries…………. Sales office rent………………… Accounting manager's salary……………. Depreciation (straight-line) on factoryequipment………………………… Sales commissions………………

Cost: cost is the expenses incurred in a Firm Classification of Costs Cost can be classified into 2 groups they are: Cost by behaviour: under Cost by behaviours costs are classified into 2 Fixed cost: the costs that remain fixed for total production or sales but vary in per unit production or sales Variable costs that remain variable in total production or sales and remain fixed in per unit production or sales Cost by Function: Under cost by Function costs are classified into 2 Product cost: The costs that are closely related to production or product Period cost: the costs that are acquired for a period (operating expenses Cost by behaviour Cost by Function Variable Fixed Product Period Peanut butter for treats X X Baking labour X X Factory property tax X X Human Resources Staff Salaries X X Sales office rent X X Accounting managers salary X X Depreciation (straight-line) on Factory equipment X X Sale commissions X X Cost by behaviour Cost by Function Variable Fixed Product Period Peanut butter for treats X (because the cost of Peanut butter for treats will increase as the production or sales increase) X (because Peanut butter for treats is Direct material and direct material is product cost) Baking labour X (Because Baking labour cost will increase as the production or sales increases) X (because Baking labour is a Direct labour cost and direct labour is a product cost) Factory property tax X (because Factory property tax do not change following the change in production or sales) X (Factory property tax is a cost associated with the factory and cost associated with the factory is a product cost) Human Resources Staff Salaries X (because Human Resources Staff Salaries do not change following the change in production or sales) X (Human Resources Staff Salaries is a cost related to office and is an operating expense all operating expenses are period cost) Sales office rent X(Sales office rent do not change following the change in production or sales) X (Sales office rent is a cost related to office and is an operating expense all operating expenses are period costs) Accounting managers salary X (Accounting managers salaries do not change following the change in production or sales) X (Accounting managers salary is a cost related to office and is an operating expense all operating expenses are period costs) Depreciation (straight-line) on Factory equipment X (Depreciation (straight-line) on Factory equipment do not change following the change in production or sales)) X (Depreciation (straight-line) on Factory equipment is a cost associated with the factory and cost associated with the factory is a product cost) Sale commissions X (because Sale commissions will increase as the production or sales increases) X(Sale commissions is a cost related to sales and is an operating expense all operating expenses are period costs)

Answered: . Classify each cost as either fixed or…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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	Cost by behavior	Cost by function
	Variable	Fixed	Product	Period
Peanut butter for treats…………
Baking labor.................................
Factory property taxes…………….
Human Resources staff salaries………….
Sales office rent…………………
Accounting manager's salary…………….
Depreciation (straight-line) on factory equipment…………………………
Sales commissions………………