Classification Of Costs Manufacturing Sector The Fremont California Plant Of

Classification of costs, manufacturing sector, the Fremont, California, plant of New United Motor Manufacturing, Inc. (NUMMI), a joint venture of General Motors and Toyota, assembles two types of cars (Corollas and Geo Prisms). Separate assembly lines are used for each type of car. Classify each of the following cost items as:

a. Direct or indirect (D or I) costs with respect to the total number of cars of each type assembled (Corolla or Geo Prism).

b. Variable or fixed (V or F) costs with respect to how the total costs of the plant change as the total number of cars of each type assembled changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the total number of cars of each type assembled.)

You will have two answers (D or I; V or F) for each of the following items:

Cost Item D or I V or F

A. Cost of tires used on Geo Prisms

B. Salary of public relations manager for NUMMI plant.

C. Annual awards dinner for Corolla

D. Salary of engineer who monitors design changes on Geo Prism

E. Freight Costs of Corolla engines shipped from Toyota City, Japan, to Fremont. California

F. Electricity costs for NUMMI plant (single bill covers entire plant)

G. Wages paid to temporary assembly-line workers hired in periods of high production (paid u hourly basis)

H. Annual fire-insurance policy cost for NUMMI plant

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