Other direct materials Custodian in factory Depreciation on formers Night guard

Other direct materials custodian in factory

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Other direct materials Custodian in factory Depreciation on formers Night guard in factory Depreciation on mixing machines Machinist (running the mixing machine) Rent on factory building Machine maintenance personnel in each department
2-9 Fire insurance on factory building Maintenance supplies for factory Factory utilities Cleaning supplies for factory Finishing department hourly laborers Machinist (running the forming machines) 2. If the cost object were the “mixing department” rather than units of production of each kind of tire, which preceding costs would now be direct instead of indirect costs? SOLUTION (15 min.) Direct, indirect, fixed, and variable costs. 1. Rubber direct, variable Reinforcement cables direct, variable Other direct materials direct, variable Depreciation on formers in direct, fixed (unless “units of output” depreciation, which then would be variable) Depreciation on mixing machines —indirect, fixed (unless “units of output” depreciation, which then would be variable) Rent on factory building indirect, fixed Fire Insurance on factory building indirect, fixed Factory utilities indirect, probably some variable and some fixed (e.g., electricity may be variable but heating costs may be fixed) Finishing department hourly laborers direct, variable (or fixed if the laborers are under a union contract) Mixing department manager indirect, fixed Materials handlers depends on how they are paid. If paid hourly and not under union contract, then indirect, variable. If salaried or under union contract, then indirect, fixed Custodian in factory indirect, fixed Night guard in factory indirect, fixed Machinist (running the mixing machine) depends on how they are paid. If paid hourly and not under union contract, then indirect, variable. If salaried or under union contract, then indirect, fixed Machine maintenance personnel indirect, probably fixed, if salaried, but may be variable if paid only for time worked and maintenance increases with increased production Maintenance supplies indirect, variable Cleaning supplies indirect, most likely fixed because the custodians probably do the same amount of cleaning every night Machinist (running the forming machine) depends on how they are paid. If paid hourly and not under union contract, then indirect, variable. If salaried or under union contract, then indirect, fixed 2. If the cost object is Mixing Department, then anything directly associated with the Mixing Department will be a direct cost. This will include: Depreciation on mixing machines