Jeelani Construction Company is composed of two divisions: (1) Home Construction
ID: 2363643 • Letter: J
Question
Jeelani Construction Company is composed of two divisions: (1) Home Construction and (2) Commercial Construction. The Home Construction Division is in the process of building 12 houses and the Commercial Construction Division is working on 3 projects. Cost items of the company follow: Company president's salary Depreciation on crane used in commercial construction Salary of corporate office manager Wages of workers assigned to a specific construction project Supplies used by the Commercial Construction Division Labor on a particular house Salary of the supervisor of commercial construction projects Supplies, such as glue and nails, used by the Home Construction Division Cost of building permits Materials used in commercial construction projects Depreciation on home building equipment (small tools such as hammers or saws) A. Identify each cost as being a direct or indirect cost assuming the cost objects are the individual products (houses or projects). B. Identify each cost as being a direct or indirect cost, assuming the cost objects are the two divisions. C. Identify each cost as being a direct or indirect cost assuming the cost object is Jeelani Construction Company as a whole.Explanation / Answer
Company president’s salary
Indirect
Depreciation on crane used in commercial construction
Direct
Depreciation on home office building
Indirect
Salary of corporate office manager
Indirect
Wages of workers assigned to a specific construction project
Direct
Supplies used by Commercial Construction Division
Indirect
Labor on a particular house
Direct
Salary of the supervisor of commercial construction projects
Indirect
Supplies, such as glue and nails, used by the Home Construction Division
Indirect
Cost of building permits
Direct
Materials used in commercial construction projects
Indirect
Depreciation on home building equipment (small tools such as hammers or saws)
Direct
b) Identify each cost as being a direct or indirect cost, assuming the cost objects are the two divisions.
Company president’s salary
Indirect
Depreciation on crane used in commercial construction
Direct
Depreciation on home office building
Indirect
Salary of corporate office manager
Indirect
Wages of workers assigned to a specific construction project
Direct
Supplies used by Commercial Construction Division
Direct
Labor on a particular house
Direct
Salary of the supervisor of commercial construction projects
Direct
Supplies, such as glue and nails, used by the Home Construction Division
Direct
Cost of building permits
Direct
Materials used in commercial construction projects
Direct
Depreciation on home building equipment (small tools such as hammers or saws)
Direct
c) Identify each cost as being a direct or indirect cost assuming the cost object is Jeelani Construction Company as a whole.
Company president’s salary
Direct
Depreciation on crane used in commercial construction
Direct
Depreciation on home office building
Direct
Salary of corporate office manager
Direct
Wages of workers assigned to a specific construction project
Direct
Supplies used by Commercial Construction Division
Direct
Labor on a particular house
Direct
Salary of the supervisor of commercial construction projects
Direct
Supplies, such as glue and nails, used by the Home Construction Division
Direct
Cost of building permits
Direct
Materials used in commercial construction projects
Direct
Depreciation on home building equipment (small tools such as hammers or saws)
Direct
Company president’s salary
Indirect
Depreciation on crane used in commercial construction
Direct
Depreciation on home office building
Indirect
Salary of corporate office manager
Indirect
Wages of workers assigned to a specific construction project
Direct
Supplies used by Commercial Construction Division
Indirect
Labor on a particular house
Direct
Salary of the supervisor of commercial construction projects
Indirect
Supplies, such as glue and nails, used by the Home Construction Division
Indirect
Cost of building permits
Direct
Materials used in commercial construction projects
Indirect
Depreciation on home building equipment (small tools such as hammers or saws)
Direct
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