For each cost indicate whether it is a direct

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Finite Mathematics and Applied Calculus
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Chapter 15 / Exercise 85
Finite Mathematics and Applied Calculus
Costenoble/Waner
Expert Verified
Costs involved in the process are listed next. For each cost, indicate whether it is a directvariable, direct fixed, indirect variable, or indirect fixed cost, assuming “units of production ofeach kind of tire” is the cost object.
2.If the cost object were the “mixing department” rather than units of production of each kind oftire, which preceding costs would now be direct instead of indirect costs?SOLUTION(15 min.) Direct, indirect, fixed, and variable costs.1. Rubber—direct, variableReinforcement cables—direct, variableOther direct materials—direct, variableDepreciation on formers—indirect, fixed (unless “units of output” depreciation, which then would be variable)
2-8
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Finite Mathematics and Applied Calculus
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Chapter 15 / Exercise 85
Finite Mathematics and Applied Calculus
Costenoble/Waner
Expert Verified
Depreciation on mixing machines—indirect, fixed (unless “units of output” depreciation, which then would be variable)Rent on factory building—indirect, fixedFire Insurance on factory building—indirect, fixedFactory 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, fixedMaterials 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, fixedCustodian in factory—indirect, fixedNight guard in factory—indirect, fixedMachinist (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 productionMaintenance supplies—indirect, variableCleaning supplies—indirect, most likely fixed because the custodians probably do the same amount of cleaning every nightMachinist (running the forming machine)—depends on how they are paid. If paid hourly andnot under union contract, then indirect, variable. If salaried or under union contract,then indirect, fixed2. 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 machinesMixing Department managerMaterials handlers (of the Mixing Department)Machinist (running the mixing machines)Machine Maintenance personnel (of the Mixing Department)Maintenance supplies (if separately identified for the Mixing Department)

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