Bundle: Managerial Accounting, 14th + Cengagenowv2, 1 Term Printed Access Card
14th Edition
ISBN: 9781337499989
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 1, Problem 7E
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.
To classify: Each cost as either direct cost or indirect cost.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
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.
Costs
Classification
a. Cost to lease (rent) railroad cars
b. Cost of track and bed (ballast) replacement
c. Diesel fuel costs
d. Cost to lease (rent) train locomotives
e. Depreciation of terminal facilities
f. Maintenance costs of right-of-way, bridges, and buildings
g. Salaries of dispatching and communications personnel
h. Headquarters information technology support staff salaries
i. Safety training costs
j. Wages of train engineers
k. Wages of switch and classification yard personnel
l. Costs of accident cleanup
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.a. Cost to lease (rent) railroad carsb. Cost of track and bed (ballast) replacementc. Diesel fuel costsd. Cost to lease (rent) train locomotivese. Depreciation of terminal facilitiesf. Maintenance costs of right-of-way, bridges, and buildingsg. Salaries of dispatching and communications personnelh. Headquarters information technology support staff salariesi. Safety training costsj. Wages of train engineersk. Wages of switch and classification yard personnell. Costs of accident cleanup
Classify each Direct or indirect cost
a. Cost to lease (rent) railroad cars
b. Cost of track and bed (ballast) replacement
c. Diesel fuel costs
d. Cost to lease (rent) train locomotives
e. Depreciation of terminal facilities
f. Maintenance costs of right-of-way, bridges, and buildings
g. Salaries of dispatching and communications personnel
h. Headquarters information technology support staff salaries
i. Safety training costs
j. Wages of train engineers
k. Wages of switch and classification yard personnel
I. Costs of accident cleanup
Chapter 1 Solutions
Bundle: Managerial Accounting, 14th + Cengagenowv2, 1 Term Printed Access Card
Ch. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - What manufacturing cost term is used to describe...Ch. 1 - Distinguish between prime costs and conversion...Ch. 1 - What is the difference between a product cost and...Ch. 1 - Name the three inventory accounts for a...Ch. 1 - In what order should the three inventories of a...Ch. 1 - What are the three categories of manufacturing...Ch. 1 - Prob. 9DQCh. 1 - How does the Cost of goods sold section of the...
Ch. 1 - Management process Three phases of the management...Ch. 1 - Prob. 2BECh. 1 - Prime and conversion costs Identify the following...Ch. 1 - Product and period costs Identify the following...Ch. 1 - Cost of goods sold, cost of goods manufactured...Ch. 1 - Prob. 1ECh. 1 - Prob. 2ECh. 1 - Prob. 3ECh. 1 - Prob. 4ECh. 1 - Concepts and terminology From the choices...Ch. 1 - Prob. 6ECh. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Classifying costs The following is a manufacturing...Ch. 1 - Prob. 10ECh. 1 - Manufacturing company balance sheet Partial...Ch. 1 - Prob. 12ECh. 1 - Prob. 13ECh. 1 - Cost of goods manufactured for a manufacturing...Ch. 1 - Income statement for a manufacturing company Two...Ch. 1 - Statement of cost of goods manufactured for a...Ch. 1 - Cost of goods sold, profit margin, and net income...Ch. 1 - Cost flow relationships The following information...Ch. 1 - Classifying costs The following is a list of costs...Ch. 1 - Prob. 2PACh. 1 - Cost classifications for a service company A...Ch. 1 - Manufacturing income statement, statement of cost...Ch. 1 - Statement of cost of goods manufactured and income...Ch. 1 - Prob. 1PBCh. 1 - Classifying costs The following is a list of costs...Ch. 1 - Prob. 3PBCh. 1 - Several items are omitted from the income...Ch. 1 - Statement of cost of goods manufactured and income...Ch. 1 - Prob. 1ADMCh. 1 - Comparing occupancy for two hotels Sunrise Suites...Ch. 1 - Prob. 3ADMCh. 1 - Prob. 4ADMCh. 1 - Prob. 1TIFCh. 1 - Communication Todd Johnson is the Vice President...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Depreciation on a courier company’s fleet of delivery trucks is Select one: a. All of the answers given b. committed cost c. discretionary cost. d. engineered coarrow_forwardState and classify the items as per Theory of constraints: 1.Depreciation of a machinery 2.Rental utilities 3.R & D costs 4.Equipment & buildings-costs 5.Raw materials in stock 6.Sales of the product 7.Inventory-Finished goodsarrow_forwardAll of the following costs would be included when calculating equipment cost, except: Select one: a. Installation costs on new equipment. b. Insurance during transit on new equipment. c. Sales taxes paid on new delivery truck. O d. Motor vehicle licenses cost on delivery trucks.arrow_forward
- What costs are considered conversion costs?a. Steel in a car factory b. Depreciation on factory equipmentc. Monthly advertising expenses d. Sales commissionsarrow_forwardWhich of the following is a product cost? A) Sales commissions B) CEO's salary C) Delivery van depreciation D) Depreciation on production equipmentarrow_forwardWhich of the following is an example of a cost that varies in proportion to changes in the activity base? Depreciation on machinery Packaging cost Factory rent Insurance costarrow_forward
- Within the accounting system of a group of companies, the following types of expenses are incurred. Complete the following table by placing each expense in the correct cost classification. Reference Number Types of expenses 1 Costs of opening a new facility 2 Costs of conducting business in a new location or with a new class of customer (including costs of staff training) 3 Costs of site preparation 4 Costs of testing whether the asset is functioning properly 5 Electrical installation costs 6 Costs of dismantling and removing the item and restoring the site on which it is located 7 Administration costs 8 Import duty of an imported machine 9 Purchase of a five-year maintenance contract with plant 10 Legal fees for sales and purchase agreement for acquisition of land 11 Interest on loan on a self constructed property after the asset is ready for use 12 Architect fees incurred for self constructed building 13 General overheads incurred for self…arrow_forward(Multiple Choice Question) Casting Corp gets new equipment delivered to its factory. The cost of delivery is: 1. Debit to an asset account called Equipment Delivery 2. Recorded as Freight In 3. Debited to the Equipment account along with the purchase price of the equipment 4. Recorded as Delivery Expensearrow_forwardWhich one of the following accounts is an asset similar to work-in-process inventory? Group of answer choices Construction in Progress Cost of Construction Billings in Excess of Cost Revenue from Long-Term Contractsarrow_forward
- Which of the following is a direct cost with respect to producing a motor car? O a. Cost of car engine b. Salary of production supervisor O c. Depreciation of plant & equipment d. Plant utilities Next pagearrow_forwardThe cost of inventories include all of the following, except A. Selling cost B. Costs of purchase C. Costs of conversion D. Other costs incurred in bringing the inventories to their present condition or location.arrow_forwardArabica Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2012, they estimated total manufacturing overhead costs at $1,050,000, and they estimated total direct labor costs at $840,000. In June, 2012, Arabica completed job number 511. Job stats are as follows: Direct materials cost $27,500 Direct labor cost $13,000 Direct labor hours 400 hours Units of product produced: 200 crates How much manufacturing overhead was allocated to the job? O a. $5,000 O b. $34,375 O c $16,250 O d. $10,400arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cost Classifications - Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=QQd1_gEF1yM;License: Standard Youtube License