Question

Classify each of the following costs as a direct cost or an indirect​ cost, assuming that the cost object is the Juniors Department​ (clothing and accessories for teenage and young​ women) in the Stow​ Kohl's department store.​ (Kohl's is a chain of department stores and has stores located across the United​ States.)
a. Depreciation of the building
b. Cost of costume jewelry on the mannequins in the Juniors Department
c. Cost of bags used to package customer purchases at the main registers for the store
d. The Medina Kohl's store manager's salary
e. Cost of the security staff at the Medina store
f. Manager of Juniors Department
g. Juniors Department sales clerks
h. Cost of Juniors clothing
i. Cost of hangers used to display the clothing in the store
j. Electricity for the building
k. Cost of radio advertising for the store
l. Juniors clothing buyers' salaries (these buyers buy for all the Juniors Departments of Kohl's stores)

Answer 1

Answer:

a. Indirect Cost

b. Direct Cost

c. Indirect Cost

d. Indirect Cost

e. Indirect Cost

f.  Direct Cost

g. Direct Cost

h. Direct Cost

i.  Indirect Cost

j.  Indirect Cost

k. Indirect Cost

l.  Direct Cost

Explanation:

The first step in determining whether a cost is a direct cost or indirect cost is to identify the cost object. This is very important !

So with Juniors Department selected as the cost object, we then need to identify costs that can be directly traced by observation into the Juniors Department (Direct Cost) and those costs that can not be directly traced to the Juniors Department (Indirect Costs).