Cost Classification (Assignment #1) Her first action plan was to list all the key products or items that she would need to start the business. Keishas list included a conventional oven, a cash register, baking pans, business licenses, health inspections, flour, sugar, baking soda, raisins, butter, eggs, and rum. She also planned on hiring her accounting professor on a part time basis to perform bookkeeping services and her nieces Brianna and Alexis, to help her in the bakery. Aunt Sue Ellen would supervise the girls so that Keisha could focus on developing her business. K&Js cost drivers are provided in Table 1. Required: Keisha needs your help in classifying the various costs. In order to manage these costs, she wants them identified using the information below. She asked that you use Table 2 for your answers. a. Behavior (fixed or variable) b. Traceability (direct or indirect) c. Financial reporting (product or period) d. If product cost, identify which items are direct materials, direct labor, or manufacturing overhead.

Item and Ingredients Conventional oven Standard per Cake n/a Cost $6,000 (depreciated over 5 years on a SL basis No salvage value) SO (provided by the landlord) SO (paid for by dad) $24 per 8 pounds bag $2 per dozen $15 per 25 pounds bag $6 per 14 pounds box $6.50 per 4 pounds $8 per 2 pounds Refrigerator Baking pans, licenses Baking flour Eggs Sugar Baking soda Butter Raisins Others (currants, diced date, nutmeg, molasses) Cash Register n/a 1 pound 4 eggs 1 pound 1 pound 2 pound $30 for all 4 boxes per month $12 per month (rental for 2 years) | $12 per bottle $50 per month 14 qtr of bottle Rum (alcohol) Utilities includes gas, electric and water Mobile phone (business) Salary-Keisha Salary - nieces $50 per month $500 per month $8 per hour 1 person 1.5 hours per cake Salary-aunt Accountant Estimated MOH $100 per month $100 per month $4.00 per cake Table 2 Cost Classification Chart Fixed Variable Direct Indirect Product DMDL MOH Period Oven Cash Register Baking pans Business License Health Inspections Rent Utilities Mobile Phone Flour Sugar Baking Soda Butter Raisons Eggs Rum Others Accountant Brianna Alexis Keisha Aunt Ellen Item and Ingredients Conventional oven Standard per Cake n/a Cost $6,000 (depreciated over 5 years on a SL basis No salvage value) SO (provided by the landlord) SO (paid for by dad) $24 per 8 pounds bag $2 per dozen $15 per 25 pounds bag $6 per 14 pounds box $6.50 per 4 pounds $8 per 2 pounds Refrigerator Baking pans, licenses Baking flour Eggs Sugar Baking soda Butter Raisins Others (currants, diced date, nutmeg, molasses) Cash Register n/a 1 pound 4 eggs 1 pound 1 pound 2 pound $30 for all 4 boxes per month $12 per month (rental for 2 years) | $12 per bottle $50 per month 14 qtr of bottle Rum (alcohol) Utilities includes gas, electric and water Mobile phone (business) Salary-Keisha Salary - nieces $50 per month $500 per month $8 per hour 1 person 1.5 hours per cake Salary-aunt Accountant Estimated MOH $100 per month $100 per month $4.00 per cake Table 2 Cost Classification Chart Fixed Variable Direct Indirect Product DMDL MOH Period Oven Cash Register Baking pans Business License Health Inspections Rent Utilities Mobile Phone Flour Sugar Baking Soda Butter Raisons Eggs Rum Others Accountant Brianna Alexis Keisha Aunt Ellen