Grace Lee is the newly appointed management accounting manager for a small manufacturing company which until now has not been particularly efficient at cost control or classifying its costs. The business is under severe financial pressure and as part of an efficiency drive is beginning the process of improving cost classification as an initial stage of improving its financial systems. As part of her initial review of the business, Grace has identified the following costs: - lubricant for machines: - holiday pay of machine operatives; - carriage on purchase of raw materials: - raw materials: - factory security guards; - wages of store keeper in raw materials store; - audit fees; - salaries of administrative staff: - rent of finished goods warehouse; - salaries of sales staff; - factory floor supervisors' wages: - sales commissions; - licenses with performing rights society for music played in factory: - road fund licenses on delivery vehicles; - wages of forklift truck drivers in materials store; - fees to advertising agency: - direct marketing campaigns; - insurance of company's premises; - protective clothing for machine operatives; - depreciation of factory plant and equipment: - interest on bank overdraft; - royalties payable on units of production; - trade discounts given to customers: - production operatives' wages Group B: Costs can basically be divided into costs for stock valuation, costs for control and costs for decision making. Allocating costs for control is concerned with responsibility accounting. All costs are controllable at a certain level within an organisation, but managers should only be allocated costs over which they have specific control under. Based on the information given, who would you hold responsible for incurring these costs for control purposes? As a manager, you have to be aware of how costs will behave in a specific situation. You are required to explain how costs behave at various levels of activity and classify costs for control and decision-making purposes