Question

1. Bowie manufacturing wants to estimate costs for each product they produce at its Marfa plant. The Marfa plant produces three products at this plant, and runs two flexible assembly lines. Each assembly line can produce all three products. Required:a. Classify each of the following costs as either direct or indirect for each product.b. Classify each of the following costs as either fixed or variable with respect to the number of units produced of each productb) Depreciation on the assembly line equipment (Straight-line)A. Direct and FixedB. Direct and VariableC. Indirect and FixedD. Indirect and Variable

Answer 1

Answer: C. Indirect and Fixed

Explanation:

Depreciation is an indirect expenses because it does not have anything to do with the actual production of goods but rather only affects the equipment used in the assembly line.

It is also a fixed cost because it is being done using a straight-line method which makes depreciation a fixed amount for each of the total number of years it is to be depreciated.