Question
Your sister turned her pottery hobby into a small business called Glazed Over. She manufactures and sells bowls that can be used for decoration or
Your sister turned her pottery hobby into a small business called Glazed Over. She manufactures and sells bowls that can be used for decoration or for birdbaths. She has one employee who works 40 hours per week, no matter how many bowls are made. Your sister has asked your advice in developing a cost function for the bowls so that she can estimate costs for the next period. The following list of costs comes from your sisters general ledger. Assume that the cost object is an individual unit (i.e., bowl). Categorize each cost as direct (D) or indirect (I) and as fixed (F), variable (V), or mixed (M).
Fixed (F), | ||||||
---|---|---|---|---|---|---|
Direct (D) / | Variable (V) | |||||
Indirect (I) | or Mixed (M) | |||||
A. | Employee wages | DID or I | V or FF or MVV or MMF | |||
B. | Clay used to make bowls | IDD or I | MFV or MF or MV or FV | |||
C. | Depreciation on the kilns | D or IDI | F or MFV or MMV or FV | |||
D. | Glaze (the finish painted on the bowls) | DD or II | MF or MV or MFV or FV | |||
E. | Brushes for the glaze | DID or I | MF or MV or MFV or FV | |||
F. | Electricity | ID or ID | V or MVF or MV or FFM | |||
G. | Business license | D or IDI | MV or FVF or MFV or M | |||
H. | Advertising | ID or ID | V or MFF or MV or FVM | |||
I. | Pottery studio maintenance (cost of weekly cleaning service) | IDD or I | V or MF or MFVV or FM | |||
J. | Packing materials for the bowls |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started