=+2-21 K Direct, indirect, fixed and variable costs OBJECTIVES 1, 2, 3 Best Breads manufactures two types of bread, which are sold as wholesale products to various specialty retail bakeries. Each loaf of bread requires a three-step process. The first step is mixing. The mixing department combines all of the necessary ingredients to create the dough and processes it through high-speed mixers. The dough is then left to rise before baking. The second step is baking, which is an entirely automated process. The baking department moulds the dough into its final shape and bakes each loaf of bread in a high-temperature oven. The final step is finishing, which is an entirely manual process. The finishing department coats each loaf of bread with a special glaze, allows the bread to cool and then carefully packages each loaf in a specialty carton for sale in retail bakeries.

Required 1 Costs involved in the process are listed below. For each cost below, indicate whether it is a direct variable, direct fixed, indirect variable or indirect fixed cost, assuming ‘units of production of each kind of bread’ is the cost object.

Costs:

Yeast Flour Packaging materials Depreciation on ovens Depreciation on mixing machines Rent on factory building Fire insurance on factory building Factory utilities Finishing department hourly labourers Mixing department manager Materials handlers in each department Custodian in factory Night security guard in factory Machinist (running the mixing machine)

Machine maintenance personnel in each department Maintenance supplies for factory Cleaning supplies for factory