Classify each of the following as direct or indirect with respect to traceabilit
ID: 2370896 • Letter: C
Question
Classify each of the following as direct or indirect with respect to traceability to product and as variable or fixed with repect to whether the costs fluctuate in total as volume of production changes over wide ranges. Explain clasifications.
1. The cost of components that are assembled into final product
2, The cost of supplies consumed when maintenance is performed on machines
3. The wages of machine operaters who work on only one product. (Assume increases in production would require paying for additional wages for machine operaters.)
4. The cost of training mechanics who service processing machinery (Assume the costs are asociated with more than one product)
Explanation / Answer
1. The cost of components that are assembled into final product
This is Direct cost.
This is Variabe cost & will fluctuate as volume of prodn changes
2, The cost of supplies consumed when maintenance is performed on machines
Indirect cost.
This is variable cost & will vary with no of machines
3. The wages of machine operaters who work on only one product. (Assume increases in production would require paying for additional wages for machine operaters.)
Direct cost.
This is Variabe cost & will fluctuate as volume of prodn changes
4. The cost of training mechanics who service processing machinery (Assume the costs are asociated with more than one product)
Indirect cost.
Variable cost. Will vary with no of mechancis