JORDAN, REA MARIZ I.

MANAGEMENT ACCOUNTING & CONTROL

MBA – 1st Trimester SY 2021-22

COST CONCEPTS AND CLASSIFICATIONS

Learning Activity 4

The following are items normally found in the cost reports of a sedan car assembly company:

a. Cost of engines shipped from producing plants.

b. Salary of research and development officer in the assembly plant.
c. Annual fire insurance policy for the assembly plant.
d. Wages paid to temporary assembly-line workers hired in periods of high production,
workers are paid on an hourly basis.
e. Electricity costs of parts received from suppliers.
f. Annual awards dinner for suppliers.
g. Salary of design engineer who monitors design changes.
h. Communications costs, under a plan basis.

Required: Classify each cost as either direct or indirect with respect to the assembly process
and variable or fixed with respect to how the total costs of the plant change as the number of
cars assembled changes. Use the format below:

Cost Item Direct or Indirect Variable or Fixed

A Direct Variable
B Indirect Fixed
C Indirect Fixed
D Direct Variable
E Indirect Variable
F Direct Fixed
G Indirect Fixed
H Indirect Fixed