Purposes of classifying the direct or indirect cost


Response to the following problem:

A partial list of the costs for Mountain Lakes Railroad, a short hauler of freight, is provided below. Classify each cost as either indirect or direct. For purposes of classifying each cost as direct or indirect, use the train as the cost object.

a. Wages of switch and classification yard personnel

b. Cost to lease (rent) railroad cars

c. Depreciation of terminal facilities

d. Payroll clerk salaries

e. Salaries of dispatching and communications personnel

f. Safety training costs

g. Cost to lease (rent) train locomotives.

h. Wages of train engineers

i. Cost of track and bed (ballast) replacement

j. Costs of accident cleanup

k. Fuel costs

l. Maintenance costs of right of way, bridges, and buildings.

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Managerial Accounting: Purposes of classifying the direct or indirect cost
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