Question 3

Question 3 – Hockeydrive Ltd

Hockeydrive Ltd manufactures hockey sticks. The products are used from school to international level. The business has been established for 30 years and is well known for the quality of its product.

The company’s production costs are classified into the following categories:

· direct labour

· indirect labour

· direct material

· indirect material

· direct expenses

· indirect expenses

Indirect labour, material and expenses are also referred to as overheads.

The following is a list of costs taken from an analysis of a month’s activities:

Cane material for handles, production supervisors’ salary, production operatives’ wages, canteen assistants’ wages, factory rates, power for machinery, factory heating and lighting, rubber grips for stick handles, hire of special tool for one particular order, cost of oil for lubricating machines, depreciation of machinery.

Question

Classify these costs to the headings shown above; set out your answer as:

Cost Classification

(30 marks)