Costs and Direct Cost
Universiti Kebangsaan Malaysia
Graduate School Of Business
(UKM-GSB-LHDN)
Cost Classification:
Government Agency
PROBLEM 2-56
The Department of Natural Resources is responsible for maintaining the state’s parks and forest lands, stocking the lakes and rivers with fish, and generally overseeing the protection of the environment. Several cost incurred by the agency are listed below. For each cost, indicate which of the following classifications best describe the cost. More than one classification may apply to the same cost item.
The Answers :
1. Cost of automobiles used by department’s rangers. These cars were purchased by the state, and they would otherwise have been used by the state police. i. Fixed cost ii. Controllable by the department director iii. Opportunity cost iv. Sunk cost v. Direct cost of the agency vi. Indirect cost of providing a particular service
2. Cost of live-trapping and moving beaver that were creating a nuisance in recreational lakes. i. Variable cost ii. Controllable by the department director iii. Out of pocket cost iv. Direct cost of the agency v. Direct cost of providing a particular service
3. The department director’s salary. i. Fixed ii. Uncontrollable by the department director iii. Out of pocket cost iv. Direct cost of the agency v. Indirect cost of providing a particular service
4. Cost of containing naturally caused forest fires, which are threatening private property. i. Variable cost ii. Uncontrollable by the department director iii. Out of pocket cost iv. Direct cost of the agency v. Direct cost of providing a particular service
5. Cost of the fish purchased from private hatcheries, which are used to stock the state’s public water. i. Variable cost ii. Controllable by the department director iii. Out of pocket cost iv. Direct cost of the agency v. Direct cost of providing a
Graduate School Of Business
(UKM-GSB-LHDN)
Cost Classification:
Government Agency
PROBLEM 2-56
The Department of Natural Resources is responsible for maintaining the state’s parks and forest lands, stocking the lakes and rivers with fish, and generally overseeing the protection of the environment. Several cost incurred by the agency are listed below. For each cost, indicate which of the following classifications best describe the cost. More than one classification may apply to the same cost item.
The Answers :
1. Cost of automobiles used by department’s rangers. These cars were purchased by the state, and they would otherwise have been used by the state police. i. Fixed cost ii. Controllable by the department director iii. Opportunity cost iv. Sunk cost v. Direct cost of the agency vi. Indirect cost of providing a particular service
2. Cost of live-trapping and moving beaver that were creating a nuisance in recreational lakes. i. Variable cost ii. Controllable by the department director iii. Out of pocket cost iv. Direct cost of the agency v. Direct cost of providing a particular service
3. The department director’s salary. i. Fixed ii. Uncontrollable by the department director iii. Out of pocket cost iv. Direct cost of the agency v. Indirect cost of providing a particular service
4. Cost of containing naturally caused forest fires, which are threatening private property. i. Variable cost ii. Uncontrollable by the department director iii. Out of pocket cost iv. Direct cost of the agency v. Direct cost of providing a particular service
5. Cost of the fish purchased from private hatcheries, which are used to stock the state’s public water. i. Variable cost ii. Controllable by the department director iii. Out of pocket cost iv. Direct cost of the agency v. Direct cost of providing a