Below are listed various costs that are found in organizations.

1. Hamburger buns in a Wendy’s restaurant.

2. Advertising by a dental office.

3. Apples processed and canned by Del Monte.

4. Shipping canned apples from a Del Monte plant to customers.

5. Insurance on a Bausch & Lomb factory producing contact lenses.

6. Insurance on Nucor’s corporate headquarters.

7. Salary of a supervisor overseeing production of printers at Ricoh.

8. Commissions paid to automobile salespersons.

9. Depreciation of factory lunchroom facilities at a General Electric plant.

10. Steering wheels installed in Tesla electric vehicles.

Required:

Using the table shown below, describe each of the costs mentioned above in two ways. In terms of cost classifications for predicting cost behavior (column 1), indicate whether the cost is fixed or variable with respect to the number of units produced and sold. With respect to cost classifications for preparing financial statements (column 2), indicate whether the item is a product cost or period cost (selling and administrative cost).

Transcribed Image Text:

Cost Classifications for: (1) Predicting (2) Preparing Cost Item Cost Behavior Financial Statements