Solved Which is an example of a traceable cost? Question 10 options: ..

Is the cost of labels attached to shirts made by a company classified as a variable cost, a fixed cost, or a mixed cost? What are the major differences between job-order costing and process-costing systems? Give an example of a well-known company that might use job-order costing and an example of a well-known company that might use process costing. Define variable and fixed costs, and provide at least two examples of each. Distinguish between a variable cost, a fixed cost, and a mixed cost. Identify a publicly traded, well-known company, and identify what you envision would be a variable cost, a fixed cost, and a mixed cost for this company.

One of the key reasons this is such a critical point is in instances where an issue of contamination arises, and a recall is required. Traceability within the food processing industry is also utilised to identify key high production & quality areas of a business, versus those of low return, and where points in the production process may be improved. Allocating the cost of the plastic and steel is pretty simple! Since there is no plastic in widget 2 and no steel in widget 1, those two products are clearly attributable or traceable to one product right? But how do we allocate the plant manager’s salary when we are figuring out how much it costs us to produce each widget? Unless we had him track every minute of his day to one product or the other, which doesn’t sound very effective from a time management standpoint.

What are Traceable Costs?

What is the difference between traceable costs and common costs? However, if the machinery is used for the production of many products.

• The direct or traceable costs of departments can be identified with the help of source documents and accounting records.
• Allocating the cost of the plastic and steel is pretty simple!
• We also reference original research from other reputable publishers where appropriate.
• Costs that differ between alternatives are called costs.

These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable https://accounting-services.net/ publishers where appropriate. You can learn more about the standards we follow in producing accurate inpatient rehab, unbiased content in oureditorial policy.

What Are Direct Costs? Definition, Examples, and Types

Cost accounting is used by managers to make future decisions concerning the operations of a company. Distinguish between variable cost, a fixed cost, and a mixed cost. Fixed costs that support the operations of the business are costs that remain the same regardless of the business’s output. Building rent, equipment costs, salaries and insurance are examples of fixed costs. Other factors may affect these costs, but if the business’s output increases or decreases, these costs remain unaffected. For example, a company is planning to eliminate an entire product line, and wants to understand which expenses will be terminated when the product line is shut down. The costs traceable to the product line include advertising expenses, a marketing specialist, a production line, and a warehouse.

• Explain the similarities and differences between job order costing and process costing.
• This cost may be directly attributed to the project and relates to a fixed dollar amount.
• Since there is no plastic in widget 2 and no steel in widget 1, those two products are clearly attributable or traceable to one product right?
• Since the Managing Director’s salary and other Head Office expenses benefits all three operating departments, these costs should be charged to all three departments.
• An important problem in cost accounting is to determine the costs that are clearly identifi­able and traceable to a costing object, such as units of product, company segments or some other specific activity.

Using direct costs requires strict management of inventory valuation when inventory is purchased at different dollar amounts. For example, the cost of an essential component of an item being manufactured may change over time. As the item is being manufactured, the component piece’s price must be directly traced to the item. Provide examples of product costs that would be classified as indirect.

Ch. 6: Traceable Fixed Costs

Define and discuss how variable cost, fixed cost, and mixed cost is different. The salary of receptionist at an office shared by a number of doctors is a common fixed cost of the doctors. The cost is traceable to the office, but not to any one of the doctors individually. A traceable fixed cost is a fixed cost that is incurred because of the existence of a segment. If the segment had never existed, the fixed cost would have not been incurred; and if the segment were eliminated, the fixed cost would disappear. These standards for traceability have been used in successful deployments in many industries and there are now a wide range of products that are certified as being compatible with these standards. Using QuickBooks in combination with Microsoft Excel Spreadsheets and a few other low cost tools can provide an effective, low cost solution for data management.

Grapenet, an initiative by Agriculture and Processed Food Products Export Development Authority , Ministry of Commerce, Government of India is an example in this direction. GrapeNet is an internet based traceability software system for monitoring fresh grapes exported from India to the European Union. Grapenet won the National Award , in the winners announced for the best e-Governance initiatives undertaken in India in 2007. Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods. Salary of the Fritos product manager at PepsiCo maintenance cost for the building in which Boeing 747s are built liability insurance at Disney World which is a business segment of The Walt Disney Corp.

The company can separate the cost base on the depreciation expense of the location unit. Common Fixed cost is the fixed cost that supports the business activities of the two or more business segments. It is very hard to separate the cost from each segment or unit. It is the cost that is paid in total to cover all cost objectives in different business units, locations,s and so on. A traceable cost is a cost that can be directly attributed or traced to the products being produced. Is traceable fixed cost of the Fritos business segment of Pepsi Co. Cost of goods sold is defined as the direct costs attributable to the production of the goods sold in a company.