Direct cost: A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle. Indirect cost: An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production. Cost object: A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management. To explain: The most logical definition for the final cost object.

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Answer 1

Question

Chapter 16, Problem 16.3BPR

(a)

To determine

Direct cost:

A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.

Indirect cost:

An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

To explain: The most logical definition for the final cost object.

(b)

To determine

To classify: Each cost as either direct cost or indirect cost.

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Question 1: Assume a local hotel is a service entity. Give some examples of the hotel’s direct and indirect costs, specifying the cost object of each. How might the hotel’s management use this information? Question 2: Discuss what may be the issues in using process costing to estimate the cost of the services produced in mass service entities. Question 3: The following costs relate to Telecommunications Fiji Inc. 1. The salaries of the technicians who install new phone and data lines. 2. The salaries of the scientists and engineers who develop new services. 3. The cost of cables used to connect new services. 4. The salaries paid to sales staff. 5. The salaries of staff who deal with customer complaints. 6. The cost of fuel for vans used by technicians who install new services. 7. The cost of advertising in the newspapers. 8. The salaries of technicians who resolve service problems. 9. The cost of fuels for vans used by technicians who resolve service problems. Required: Classify the…

Answer 2

Question

Chapter 16, Problem 16.3BPR

(a)

To determine

Direct cost:

A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.

Indirect cost:

An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

To explain: The most logical definition for the final cost object.

(b)

To determine

To classify: Each cost as either direct cost or indirect cost.

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Answer 3

Question

Chapter 16, Problem 16.3BPR

(a)

To determine

Direct cost:

A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.

Indirect cost:

An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

To explain: The most logical definition for the final cost object.

(b)

To determine

To classify: Each cost as either direct cost or indirect cost.

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Answer 4

Question

Chapter 16, Problem 16.3BPR

(a)

To determine

Direct cost:

A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.

Indirect cost:

An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

To explain: The most logical definition for the final cost object.

(b)

To determine

To classify: Each cost as either direct cost or indirect cost.

Expert Solution & Answer

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Answer 5

Chapter 16, Problem 16.3BPR

(a)

To determine

Direct cost:

A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.

Indirect cost:

An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

To explain: The most logical definition for the final cost object.

(b)

To determine

To classify: Each cost as either direct cost or indirect cost.

Answer 6

Chapter 16, Problem 16.3BPR

(a)

To determine

Direct cost:

A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.

Indirect cost:

An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

To explain: The most logical definition for the final cost object.

Answer 7

Chapter 16, Problem 16.3BPR

(a)

To determine

Direct cost:

A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.

Indirect cost:

An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

To explain: The most logical definition for the final cost object.

Answer 8

(b)

To determine

To classify: Each cost as either direct cost or indirect cost.

Answer 9

(b)

To determine

To classify: Each cost as either direct cost or indirect cost.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 16 - What are the major differentes between managerial...Ch. 16 - A. Differentiate between a department with line...Ch. 16 - What manufacturing cost term is used to describe...Ch. 16 - Prob. 4DQ Ch. 16 - What is the difference between a product cost and...Ch. 16 - Name the three inventory accounts for a...Ch. 16 - In What order should the three inventories of a...Ch. 16 - Prob. 8DQ Ch. 16 - For a manufacturer, what is the description of the...Ch. 16 - How does the Cost of Goods Sold section of the...

Solution Summary: The author explains the difference between direct and indirect costs. The hotel guest is the most logical definition for the final cost object.

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To classify: Each cost as either direct cost or indirect cost.

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