Pops Burger Heaven produces and sells quarter-pound hamburgers. Each burger sells for $1.50. During December, Pops sold 10,000 burgers (the average amount sold each month). The restaurant employs cooks, servers, and one supervisor (the owner, John Peterson). All cooks and servers are part-time employees. Pops maintains a pool of part-time employees so that the number of employees scheduled can be adjusted to the changes in demand. Demand varies on a weekly as well as a monthly basis.

A janitor is hired to clean the building on a weekly basis. The building is leased from a local real estate company. The building has no seating capabilities. All orders are filled on a drive-through basis.

The supervisor schedules work, opens the building, counts the cash, adver- tises, and is responsible for hiring and firing. The following costs were incurred during December:

Hamburger meat . . . . . . . . $1,600 Utilities . . . . . . . . . . . . . . . . . . . . . $500 Lettuce . . . . . . . . . . . . . . . . . 300 Depreciation:

Tomatoes . . . . . . . . . . . . . . . 250 Cooking equipment......................... 200

Buns . . . . . . . . . . . . . . . . . . . 300 Cash register................................... 50

Other ingredients . . . . . . . . 20 Advertising........................................ 100

Cooks wages . . . . . . . . . . . 2,550 Janitors wages.................................. 120

Servers wages . . . . . . . . . . . 2,032 Janitorial supplies............................... 50

Supervisors salary . . . . . . . 2,000 Rent............................................... 800

Required

1. Classify each cost for Pops December operations into one of the following categories: direct materials, direct labor, overhead, or selling and administra- tive expenses.

2. Prepare an absorption-costing income statement for the month of December.

3. Suppose Pops also produces a grilled chicken sandwich and you want to determine the cost of producing both hamburgers and grilled chicken sand- wiches. How would you assign the shared cost of depreciation for the cook- ing equipment to each product? Is this direct tracing, driver tracing, or alloca- tion? Explain.