Question

Exercise 1-15 Classification of Costs as Variable or Fixed and as Product or Period [LO1-3, LO1-4]

Classify each cost as being either variable or fixed with respect to the number of units produced and sold. Also classify each cost as either a selling and administrative cost or a product cost.
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Answer #1

1 | Hamburger buns in a Wendy’s outlet. | Variable | Product cost |

2 | Advertising by a dental office. | Fixed | Selling and administrative cost |

3 | Apples processed and canned by Del Monte. | Variable | Product cost |

4 | Shipping canned apples from a Del Monte plant to customers. | Variable | Selling and administrative cost |

5 | Insurance on a Bausch & Lomb factory producing contact lenses. | Fixed | Product cost |

6 | Insurance on IBM’s corporate headquarters. | Fixed | Selling and administrative cost |

7 | Salary of a supervisor overseeing production of printers at Hewlett-Packard. | Fixed | Product cost |

8 | Commissions paid to automobile salespersons. | Variable | Selling and administrative cost |

9 | Depreciation of factory lunchroom facilities at a General Electric plant. | Fixed | Product cost |

10 | Steering wheels installed in BMWs. | Variable | Product cost |

Classify each cost as being either variable or fixed with
respect to the number of units produced and sold. Also classify
each cost as either a period or a product cost. Cost Item Variable
or Fixed? Product or Period? 1. Salary of a supervisor overseeing
production of printers at Dell. 2. Commissions paid to automobile
salespersons. 3. Hamburger buns in a Wendy’s restaurant. 4.
Insurance on IBM’s corporate headquarters. 5. Advertising by a
dental office. 6. Insurance on a Bausch...

Classify each of Georgia-Pacific’s costs below as either an
inventoriable product cost (direct or indirect) or a period cost
(selling or administrative) and also as either a variable or a
fixed cost. You should have two check marks (or “X”s) for each
listed cost below. As an example, the first one in the list has
been completed for you. Note that each item is classified in two
ways: first, as either variable or fixed with respect to the number
of...

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