Classification of costs, manufacturing sector. The Fremont, California, plant of NUMMI

(New United Motor Manufacturing, Inc.), a joint venture of General Motors and Toyota, assembles two types of cars (Corollas and Geo Prisms). A separate assembly line is used for each type of car.

REQUIRED Classify each of the following cost items as

a. Direct or indirect (D or I) costs with respect to the type of car assembled (Corolla or Geo Prism).

b. Variable or fixed (V or F) costs with respect to how the total costs of the plant change as the number of cars assembled changes. (If in doubt, select the cost type based on whether the total costs will change substantially if a large number of cars are assembled.) You will have two answers (D or I, and V or F) for each of the following items:LO1

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Cost Item A. Cost of tires used on Geo Prisms B. Salary of public relations manager for NUMMI plant C. Annual awards dinner for Corolla suppliers D. Salary of engineer who monitors design changes on Geo Prism E. Freight costs of Corolla engines shipped from Toyota City, Japan, to Fremont, California F. Electricity costs for NUMMI plant (single bill covers entire plant) G. Wages paid to temporary assembly-line workers hired in periods of high production (paid on an hourly basis) H. Annual fire-insurance policy cost for NUMMI plant D or I V or F