3.      Where would you allocate the following costs (e.g. selling and distribution, pro- duction, etc.) and who would you hold responsible for incurring these costs for control purposes? Would you regard them as fixed, variable, semi-variable or stepped fixed costs? Are they direct or indirect costs?

 

Raw materials used in the manufacture of a company’s main product Security services for the warehouse

Performing rights payments for music piped to the factory floor Direct labour payments

Oil used to lubricate productive machinery Costs of a sales promotion campaign Depreciation of factory machinery Contract price for raw materials

Overtime payments on the factory floor Supervision costs on the factory floor Forklift truck driver

 

 

 

Rent where at production above 5000 units additional workspace is required to be contracted

Audit fee

Food costs in the works canteen

Photocopy rental in sales office with additional costs incurred by use Fire insurance costs for factory

Power used in the factory Supervision of production operatives Royalty payments

Factory rental Indirect materials

Quality audit engineer Accountancy office staff Research and development Membership fee to the CBI

Company’s pension contributions for factory workers Company’s pension contributions for office staff Delivery vehicle expenses

Wages to factory temporary production operatives Television marketing campaign

Maintenance mechanic’s wages Foreman wages

Office stationery Managing director’s salary

Cost of board meetings, including non-executive salaries Payments to focus groups for comments on new products Payments for trade magazines

Annual awards dinner for factory employees Head of marketing’s salary

Storeman’s wages

Petrol costs for salesmen