Question

I need clarification on a certain cost in management accounting

I am trying to identify all of my indirect manufacturing overhead costs.etc etc

Are delivery costs of the product to the customer a product or period cost, are they indirect or direct and are they fixed , variable or mixed

The costs are as follows

Product :Tables

Delivery costs Units Produced

$300 100

$600 200

$1200 300

Are these a product cost or period cost? As they are related to the actual product being tables.

Are they indirect or direct? to me they directly relate to the product in a economically fesasible way

I assume they are variable as they change with the amount of production output.

Thanks!

Answer 1

ANSWER :- DELIVERY COST IS SELLING AND DISTRIBUTION OVERHEADS AS PER THE FUNCTIONAL CLASSIFICATION OF COSTS AND SEMI-VARIABLE AS PER BEHAVIOURIAL CLASSIFICATION OF COSTS. THIS COST IS SEMI VARIABLE WITH REFERENCE TO QUANTITY DELIVERD AND NOT TO QUANTITY PRODUCED.THIS COST IS INDIRECT SEMIVARIABLE COST. IT SEEMS IN THE GIVEN PROBLEM THAT DELIVERY COST VARY TO THE UNITS PRODUCED BUT ACTUALLY, DELIVERY COST VARY TO THE QUANTITY DELIVERED. HERE THERE IS NEITHER OPENING NOR CLOSING STCK OF FINISHED STOCK ALL PRODUCED UNITS ARE DELIVERED.

SEMI-VARIABLE COST ARE THOSE COST WHICH REMAIN SAME UP TO A PERTICULAR RANGE OF PRODUCT AND VARY AFTER A PERTICULAR RANGE.