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EXERCISE 2-4 Classifying Variable, Fixed, Period, and Product Costs [L01 - CC1; L04 - CC7] Following are various costs that are found in organizations: 1. Advertising by a dental office. 2. Shipping canned apples from a Del Monte plant to customers. 3. Apples processed and canned by Del Monte Corporation 4. Insurance on IBM's corporate headquarters. 5. Commissions paid to Future Shop salespeople, 6. Hamburger buns in a McDonald's outlet 7. Depreciation of factory lunchroom facilities at a General Electric plant. 8. Insurance on a Bausch & Lomb factory producing contact lenses. 9. Salary of a supervisor overseeing production of circuit boards at Hewlett-Packard. 10. Steering wheels installed in BMWs. Required: Classify each cost as being either variable or fixed with respect to the number of units sold. Also, classify each cost as either a selling and administrative cost or a product cost. Prepare your answer sheet as shown below: Cost Behaviour Selling and Administrative Cost Cost Item Variable Fixed Product Cost Place an X in the appropriate columns to show the proper classification of each cost. m/connect/hmEBookdo?setTab=sectionTabs 57 go search ebook go book contents The following cost and inventory data are taken from the accounting records of Mason Company for the year just completed Costs incurred Direct labour cost 5 70.000 Purchases of raw materials 120.000 Indirect labour 45.000 Maintenance, factory equipment Advertising expense 90.000 Insurance factory equipment 1.900 Sales salaries 50.000 Rent, factory facilities 24,000 Supplies 3,600 Depreciation office equipment 4.500 Depreciation factory equipment 17,000 I 6,000 15,150 Beginning End of of the Year the Year Inventories: Raw materials $18,000 $12.500 Work in process 10.300 Finished goods 23.000 18.100 Required: 1. Prepare a schedule of cost of goods manufactured in good form 2. Prepare the cost of goods sold section of Mason Company's income statement for the year EXERCISE 2-6 Identifying Cost Flows (L04 - CCB Page 60

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