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PROBLEM 2-21 Cost Classification [L02-1, L02-3, L02-4]
Listed below are costs found in various organizations.
1. Property taxes, factory.
2. Boxes used for packaging detergent produced by the company.
3. Salespersons’ commissions.
4. Supervisor’s salary, factory.
5.
6. Wages of workers assembling computers.
7. Insurance, finished goods warehouses.
8. Lubricants for production equipment.
9. Advertising costs.
10. Microchips used in producing calculators.
11. Shipping costs on merchandise sold.
12. Magazine subscriptions, factory lunchroom.
13. Thread in a garment factory.
14. Billing costs.
15. Executive life insurance.
16. Ink used in textbook production.
17.
18. Yarn used in sweater production.
19. Wages of receptionist, executive offices.
Required:
Prepare an answer sheet with column headings as shown below. For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a
Manufacturing (Product) Cost | |||||
Costitem | Variableor Fixed | SellingCost | AdministrativeCost | Direct | Indirect |
Direct labor …. | V | X | |||
Executive salaries …. | F | X | |||
Factoryrent …. | F | X |

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Chapter 2 Solutions
Connect 1-Semester Access Card for Managerial Accounting
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