Chapter 1, Problem 7E

Classifying costs In a service company

A partial list of the costs for Wisconsin and Minnesota Railroad, a short hauler of freight, follows.

Classify each cost as either indirect or direct. For purposes of classifying each cost, use the train as the cost object.

1. a. Costs of accident cleanup
2. b. Cost to lease (rent) locomotives and railroad cars
3. c. Cost of track and bed (ballast) replacement
4. d. Depredation of terminal facilities
5. e. Diesel fuel costs
6. f. Information technology support staff salaries
7. g. Insurance costs
8. h. Maintenance costs of right of way, bridges, and buildings
9. i. Safety training costs
10. j. Salaries of dispatching and communications personnel
11. k. Wages of switch and classification yard personnel
12. l. Wages of train engineers