Classification of costs, merchandising sector. (15-20 minutes)

Crescendo, Srl, operates a large store in Milan. The store has both a video section and a musical (compact disks, records and tapes) section.

Crescendo reports revenues for the video section separately from the musical section.  l01 REQUIRED Classify each of the following cost items as:

a. Direct or indirect (D or D costs with respect to the video section.

b. Variable or fixed CV or F) costs with respect to how the total costs of the video section change as the number of videos sold changes. (If in doubt, select the cost type on the basis of whether the total costs will change substantially if a large number of videos are sold.)

You will have two answers (D or I;V or F) for each of the following items:

Transcribed Image Text:

COST ITEM A. Annual retainer paid to a video distributor B. Electricity costs of Crescendo store (single bill covers entire store) C. Costs of videos purchased for sale to customers D. Subscription to Video-Novo magazine E. Leasing of computer software used for financial budgeting at Crescendo store F. Cost of popcorn provided free to all customers of Crescendo G. Earthquake insurance policy for Crescendo store H. Freight-in costs of videos purchased by Crescendo DORI VOR F