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Chapter 1

Problem 1-13A (30 minutes)

Note to the Instructor: There may be some exceptions to the answers below. The purpose of this

problem is to get the student to start thinking about cost behavior and cost purposes; try to avoid

lengthy discussions about how a particular cost is classified.

Cost Item

1. Property taxes, factory ................................

2. Boxes used for packaging detergent

produced by the company .........................

3. Salespersons’ commissions ..........................

4. Supervisor’s salary, factory ..........................

5. Depreciation, executive autos ......................

6. Wages of workers assembling computers .....

7. Insurance, finished goods warehouses .........

8. Lubricants for production equipment ............

9. Advertising costs .........................................

10. Microchips used in producing calculators ......

11. Shipping costs on merchandise sold .............

12. Magazine subscriptions, factory lunchroom ...

13. Thread in a garment factory ........................

14. Billing costs ................................................

15. Executive life insurance ...............................

Variable or Selling

Fixed

Cost

F

V

V

F

F

V

F

V

F

V

V

F

V

V

F

Manufacturing

Administrative (Product) Cost

Cost

Direct Indirect

X

X

X

X

X

X

X

X

X

X

X

X

X

X*

X

© The McGraw-Hill Companies, Inc., 2010. All rights reserved.

Solutions Manual, Chapter 1

1

Problem 1-13A (continued)

16.

17.

18.

19.

Cost Item

Ink used in textbook production...................

Fringe benefits, assembly-line workers .........

Yarn used in sweater production ..................

Wages of receptionist, executive offices .......

Variable or Selling

Fixed

Cost

V

V

V

F

* Could be administrative cost.

** Could be indirect cost.

1-2

Manufacturing

Administrative (Product) Cost

Cost

Direct Indirect

X

X**

X

X

Problem 1-19A...