Direct and indirect costs, fixed and variable costs. Ceramica Company manufactures three kinds of handpainted ceramic figurines in a two-step process. The first step is automated;

in the Baking Department, a machine presses the clay figurines into moulds and bakes them. In the Painting Department, the baked figurines are carefully removed from their moulds and hand painted. After they dry, the figurines are packed and shipped to customers.

Ceramica’s two departments, Baking and Painting, are in a single factory building. Packaging takes place in the Painting Department.

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 figurine” is the cost object.

2. If the cost object were “Baking Department” rather than output, which costs above would a now be direct instead of indirect costs?LO1

Transcribed Image Text:

Costs: Clay Paint Packaging materials Amortization on machinery and moulds Rent on factory Insurance on factory Factory utilities Painters Painting Department manager Baking Department manager Materials handlers Custodian in factory Night guard in factory Machinist (running the baking machine) Machine maintenance personnel Maintenance supplies for factory Cleaning supplies for factory