Answer to Question #311579 in Microeconomics for lydia

Question

For the following indicate whether it is a direct , indirect or period cost as well as whether it is fixed or variable.

Salaries

Factory workers

Factory management

Accounting Directors

Factory equipment

Office equipment

Buildings

Purchases from creditors

Raw material

Water and electricity

Factory

Office

Other

cleaners ( office) (fixed rate as per contract)

Entertainment (amount is spend every year)

External audit fees as per contract

Answer 1

1.     Salaries – Direct cost- variable

 

2.     Factory workers-Direct cost-variable

 

3.     Factory management-indirect cost-fixed

 

4.     Accounting directors-indirect cost-fixed

 

5.     Factory equipment-Direct cost-variable

 

6.     Office equipment-indirect cost-fixed

 

7.     Buildings-Direct cost-variable

 

8.     Purchases from creditors-indirect cost-variable

 

9.     Raw material-Direct cost-variable

 

10. Water and electricity-indirect cost-variable

 

11. Factory -Direct cost-fixed

 

12. Office-Direct cost-fixed

 

13. Cleaners(office) fixed rate as per contract-period cost-fixed

 

14. Entertainment (amount is spend every year)-period cost-variable

 

15. External audit as per contract-period cost-fixed