Reference no: EM132472608

Question 1: A company manufactures and retails clothing. You are required to group the costs which are listed below and numbered (1)-(20) into the following classifications (each cost is intended to belong to only one classification): (

i) direct materials;

(ii) direct labour;

(iii) direct expenses;

(iv) indirect production overhead;

(v) research and development costs;

(vi) selling and distribution costs;

(vii) administration costs;

(viii) finance costs.

Point 1 lubricant for sewing machines;

Point 2 floppy disks for general office computer;

Point 3 maintenance contract for general office photocopying machine;

Point 4 telephone rental plus metered calls;

Point 5 interest on bank overdraft;

Point 6 developing a new product in the laboratory

Point 7 market research undertaken prior to a new product launch;

Point 8 wages of security guards for factory;

Point 9 carriage on purchase of basic raw material;

Point 10 royalty payable on number of units of product XY produced;

Point 11 wages of operatives in the cutting department;

Point 12 chief accountant's salary;

Point 13 cost of advertising products on television;