Classify each of the following costs incurred in manufacturing bicycles as varia

Question

Classify each of the following costs
incurred in manufacturing bicycles as variable (V), fi xed (F), or mixed (M) cost (using
number of units produced as the activity measure). Also indicate whether the cost is
direct material (DM), direct labor (DL), or overhead (OH).
a. Factory supervision
b. Aluminum tubing
c. Rims
d. Emblem
e. Gearbox
f. Straight-line depreciation on painting machine
g. Fenders
h. Raw material inventory clerk’s wages
i. Quality control inspector’s salary
j. Handlebars
k. Metal worker’s wages
l. Roller chain
m. Spokes (assuming cost is considered signifi cant)
n. Paint (assuming cost is considered signifi cant)

Explanation / Answer

Factory supervision F - OH

Aluminum tubing V - DM

Rims V - DM

Emblem V - DM

Gearbox V - DM

Straight-line depreciation on paint machine F - OH

Fenders V - DM

Inventory clerks salary F - OH

Inspectors salary F - OH

Handlebars V - DM

Metal workers’ wages V - DL

Roller chain V - DM

Spokes (assuming cost is considered significant) V - DM

Paint (assuming cost is considered significant) V - DM

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