Classification at costs, merchandising sector Home EntertainmentCenter (HEC) operates a large store in San Francisco. The store hasboth a video section and a music (compact disks and tapes) section.HEC reports revenues for the video section separately from themusic section. Classify each of the following cost items as: a.Direct or indirect (D or I) costs with respect to the total numberof videos sold. b. Variable or fixed (V or F) costs with respect tohow the total costs of the video section change as the total numberof videos sold changes. (If in doubt, select on the basis ofwhether the total costs will change substantially if there is alarge change in the total number of videos sold.) You will have twoanswers (D or I; V or F) for each of the following items: Cost itemD or I V or F A. Annual retainer paid to a video distributor B.Electricity costs of HEC store (single bill covers entire store) C.Costs of videos purchased for sale to customers D. Subscription toVideo Trends magazine E. Leasing of computer software used forfinancial budgeting at HEC store F. Cost of popcorn provided freeto all customers of HEC G. Earthquake insurance policy for HECstore H. Freight-in costs of videos purchased by HEC
Classification at costs, merchandising sector Home EntertainmentCenter (HEC) operates a large store in San Francisco. The store hasboth a video section and a music (compact disks and tapes) section.HEC reports revenues for the video section separately from themusic section. Classify each of the following cost items as: a.Direct or indirect (D or I) costs with respect to the total numberof videos sold. b. Variable or fixed (V or F) costs with respect tohow the total costs of the video section change as the total numberof videos sold changes. (If in doubt, select on the basis ofwhether the total costs will change substantially if there is alarge change in the total number of videos sold.) You will have twoanswers (D or I; V or F) for each of the following items: Cost itemD or I V or F A. Annual retainer paid to a video distributor B.Electricity costs of HEC store (single bill covers entire store) C.Costs of videos purchased for sale to customers D. Subscription toVideo Trends magazine E. Leasing of computer software used forfinancial budgeting at HEC store F. Cost of popcorn provided freeto all customers of HEC G. Earthquake insurance policy for HECstore H. Freight-in costs of videos purchased by HEC
