Professional Documents
Culture Documents
1. Classify the following costs as direct (D) or indirect (ID) as it relates to the
Production Department
2. Classify the following costs as variable (V) , fixed (F) or semi-variable (S) in
terms of their behaviour with respect to production and sales activity.
A. Depreciation by straight-line
B. Direct Labour
C. Insurance
D. Maintenance and repairs
E. Property taxes
F. Rent
G. Sales agent’s salary
H. Sales Agent’s commission
I. Utilities
3. Classify the following costs as either manufacturing (M), selling (S) or administrative
(A) expenses in terms of their functions
A. Advertising
B. Auditing Expenses
C. Bad Debts
D. Cost of machine break down
E. Factory Supplies
F. Employer’s payroll taxes-factory
G. Employer’s payroll taxes-sales office
H. Entertainment and travel
I. Freight-out/Carriage outwards
J. Freight-in/Carriage inwards
K. Legal expenses
L. President’s salary
M. Rent on general office building
N. Samples
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O. Sanding material using in furniture making
P. Small tools
4. Classify the following costs as product costs (PC) or period expenses (PE) in
relation to the production department
A. Advertising expenses
B. Direct labour
C. Insurance on office equipment
D. Legal fees
E. Overtime premium – production workers
F. Pears in a fruit cocktail
G. Production workers compensation
H. Rework on defective products
I. Travel Expenses
5. Which of the following costs are likely to be fully controllable, partially controllable
or not controllable by the manager of the production department.
A. Advertising
B. Direct materials used
C. Insurance on factory equipment
D. Idle time due to machine break down
E. Price paid for materials and supplies
F. Production manager’s salary
G. Rent on factory building
H. Stationery
I. Utilities
J. Wages paid to direct labour
A. Advertising
B. Depreciation
C. Executive salaries
D. Insurance
E. Patent amortization
F. Property taxes
G. Public relations
H. Research and development
I. Rent
J. Training
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A. relevant costs
B. sunk costs
C. opportunity cost
D. incremental costs
E. prime cost
F. conversion cost
[D] [E]
i. The cost of telephone service, which is based on the number of message units per
month. The charge is $60 per message for up to 650 message units. Additional
message units above 650 are free. ____________
ii. The cost of outsourcing diagnostic blood testing by a hospital. The hospital pays an
independent lab a fee of $80,000 per month plus $3 for each test done. __________
iii. The salaries of the security personnel at a factory. The security guards are on duty
around the clock. _______________
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