Question 1

1. You are a clerk to the management accountant in a manufacturing company. Classify for your production supervisor, each of the following as being usually fixed, variable, semi-fixed or semi-variable:
   1. Direct material (2 marks)
   2. Direct labour (2 marks)
   3. Factory rental (2 marks)
   4. Depreciation of machinery (2 marks)
   5. Indirect materials (2 marks)
   6. Repair and maintenance of machinery (2 marks)
   7. Factory managers salary (2 marks)
   8. Royalty payments (2 marks)

2. Cost classifications used in costing include:
   1. Product cost (2.5 marks)
   2. Period cost (2.5 marks)
   3. Direct costs (2 marks)
   4. Indirect manufacturing costs (2 marks)

Required:

Briefly explain each of these classifications, with an example of the type of cost that may be included.