Imagine purchasing a cup of coffee.Which of the following statements correctly classifies the direct,indirect,variable,and fixed costs associated with that purchase,assuming the cost object is the cup of coffee?
A)The cost of the cup and the lid is an indirect cost because it can be readily traced to the cost object.
B)The shop supervisor's salary is a direct cost because it cannot be readily and feasibly traced to the cost object.
C)The volume of coffee beans purchased is a variable cost because it changes along with the changing volume of cups of coffee sold.
D)The shop's monthly water bill is a fixed cost because it changes along with the changing volume of sales.

Question

Quizplus · Accepted Answer

The volume of coffee beans used is a variable cost because it changes along with the changing volume of cups of coffee sold.

The other options are incorrect:
A) The cost of the cup and the lid is a direct cost because it can be readily traced to the cost object.
B) The shop supervisor's salary is an indirect cost because it cannot be readily and feasibly traced to the cost object.
D) The shop's monthly water bill is an indirect cost because it cannot be readily and feasibly traced to the cost object.

Imagine Purchasing a Cup of Coffee