BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Cost classifications for a service company

A partial list of The Grand Hotel’s costs follows:

a. Cost to mail a customer survey

b. Wages of convention setup employees

c. Pay-per-view movie rental costs (in rooms)

d. Cost of food

e. Cost of room mini-bar supplies

f. Training for hotel restaurant servers

g. Cost to paint lobby

h. Cost of laundering towels and bedding

i. Champagne for guests

j. Salary of the hotel manager

k. Depreciation of the hotel

l. Cost of valet parking

m. Wages of bellhops

n. Cost to replace lobby furniture

o. Cost of advertising in local newspaper

p. Wages of desk clerks

q. Wages of maids

r. Cost of new carpeting

s. Guest room telephone costs for long-distance calls

t. Cost of soaps and shampoos for rooms

u. Utility cost

v. Wages of kitchen employees

w. General maintenance supplies

Instructions

1. What would be The Grand Hotel’s most logical definition for the final cost object? Explain.

2. Identify whether each of the costs is to be classified as direct or indirect. For purposes of classifying each cost as direct or indirect, use the hotel guest as the cost object.

(a)

To determine

Direct cost:

A cost indicates the payment of cash or the obligation to pay the cash in the future period for the generation of revenue or the service performed. A direct cost is the cost which is directly involved in the process of production. For example: The cost of plastic is the direct material for manufacturing a bottle.

Indirect cost:

An indirect cost is the cost which is indirectly involved in the process of production. For example: The salary of supervisor of a manufacturing business cannot be traced even though the supervisor contributes for the production.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

To explain: The most logical definition for the final cost object.

Explanation

Here hotel guest is the most logical definition for the final cost object...

(b)

To determine

To classify: Each cost as either direct cost or indirect cost.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is a loan amortization schedule, and what are some ways these schedules are used?

Fundamentals of Financial Management (MindTap Course List)

What is a statement of cash flows? What is its primary purpose?

Intermediate Accounting: Reporting And Analysis

Who are the users of managerial accounting information?

Managerial Accounting: The Cornerstone of Business Decision-Making

Describe business marketing

MKTG 12:STUDENT ED.-TEXT

In theory, market risk should be the only relevant risk. However, companies focus as much on stand-alone risk a...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What adverse effect might be caused by tax incentives to increase saving?

Principles of Macroeconomics (MindTap Course List)