Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 19

Classifying costs in a service company
A partial list of the costs for Wisconsin and Minnesota Railroad, a short hauler of freight, follows. Classify each cost as either indirect or direct. For purposes of classifying each cost, use the train as the cost object.
a. Cost to lease (rent) railroad cars
b. Cost of track and bed (ballast) replacement
c. Diesel fuel costs
d. Cost to lease (rent) train locomotives
e. Depreciation of terminal facilities
f. Maintenance costs of right of way, bridges, and buildings
g. Salaries of dispatching and communications personnel
h. Headquarters information technology support staff salaries
i. Safety training costs
j. Wages of train engineers
k. Wages of switch and classification yard personnel
1. Costs of accident cleanup