Exam 2: An Introduction to Cost Terms and Concepts

Holly Ltd. has the following costs for 1,000 units: Total Cost Cost per Unit Direct materials £1,500 £1.50 Direct labour 7,500 7.50 Depreciation on building 30,000 30.00 What is the total amount of direct materials for 100 units?

Mixed costs contain both

Indirect costs are usually allocated rather than traced to cost objects because

The Penang Company has the following information available regarding costs at various levels of monthly production: Froduction volume Direct materials £70,000 £100,000 Direct labour 56,000 80,000 Indirect materials 21,000 30,000 Supervisors' sal aries 12,000 12,000 Depreciation on plant and equipment 10,000 10,000 Maintenance 32,000 44,000 Utilities 15,000 21,000 Insurance on plant and equipment 1,600 1,600 Property taxes on plant and equipment Total £219,600 £300,600 a. Identify each cost as being variable, fixed, or mixed by writing the name of each cost under one of the following headings: Variable Costs $\quad$ Fixed Costs $\quad$ $\quad$ Mixed Costs b. Develop an equation for total monthly production costs. c. Predict total costs for a monthly production volume of 8,000 units.

Which of the following costs is an example of product costs?