ACCT1022 Lecture Notes - Lecture 3: Mary Kay, Heinz Tomato Ketchup, Southwest Airlines
16 Feb 2017
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You need to identify allocation bases and or cost drivers: activity or event that causes costs to be incurred. Automated production (machine hours: identifying cost drivers are critical. Total variable costs necessarily vary with the level of sales. Total fixed costs remain the same at different levels of sales. Classify each of the costs listed below as a product or period cost and a variable or fixed cost: tomatoes used in the manufacture of heinz ketchup. Product, direct material, variable: administrative salaries of executives employed by southwest airlines. Period, fixed: wages of assembly line workers at a ford plant. Product, direct labor, variable: marketing expenditures of the la dodgers baseball club, commissions paid to coca-cola"s salespeople. Period, variable: straight-line depreciation on manufacturing equipment owned by dell. Product, overhead, fixed: speakers used in sony home-theater systems. Product, direct material, variable: insurance costs related to a mary kay cosmetics" manufacturing plant. Ending rm = beginning rm + rm purchased rm used.
