E2–5 Time allowed: 15 minutes Below are listed various costs that are found in organizations:

1 Hamburger buns in a McDonald’s outlet 2 Advertising by a dental office 3 Apples processed and canned by Del Monte Corporation 4 Shipping canned apples from a Del Monte plant to customers 5 Insurance on a Bausch & Lomb factory producing contact lenses 6 Insurance on IBM’s corporate headquarters 7 Salary of a supervisor overseeing production of circuit boards at Hewlett-

Packard 8 Commissions paid to Encyclopaedia Britannica salespersons 9 Depreciation of factory lunchroom facilities at an ICI plant 10 Steering wheels installed in BMWs.

Required Classify each cost as being either variable or fixed with respect to the number of units sold. Also classify each cost as either a selling and administrative cost or a product cost. Prepare your answer sheet as shown below.

Place an X in the appropriate columns to show the proper classification of each cost.

Transcribed Image Text:

Cost item Cost behaviour Variable Fixed cost Selling and administrative cost Product cost