Classify Each Cost Item into One of the Business Functions

question 38

Essay

Classify each cost item into one of the business functions of the value chain,either (1)R&D, (2)Design, (3)Production, (4)Marketing, (5)Distribution,or (6)Customer service.
Item:
a.cost of free food mailed to promote sales of a new organic food product
b.labor cost of workers in the construction plant
c.bonus paid to a person with a 80% satisfaction rating in handling customers with complaints
d.transportation costs for shipping products to retail outlets

---

Definitions:

Absorption Costing

A method of inventory costing in which all costs of production (both variable and fixed) are treated as product costs.

Variable Costing

Variable Costing is an accounting method that only allocates variable costs to inventory and cost of goods sold, excluding fixed manufacturing overhead from inventory valuation.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, showing revenues, expenses, and net income.

Variable Costing

An accounting method that only considers variable costs (costs that fluctuate with production levels) in the calculation of product cost.