Question

Using your personal knowledge or the internet to select a product or service.  The product or service does not have to be an actual product or service – it can be completely fictional.  For the selected product or service, identify at least 5 costs involved with the product or service and complete the following questions.  

Classify each cost as direct or indirect. 

Identify the cost behavior as either variable, fixed or mixed. 

Provide a brief (2 or 3 sentences) on the relationship of these costs. 

Please note you will need to make some assumptions about the product or service.  Internal product information is generally not available to the public so you will need to make some educated guesses about what may be required.  

Answer 1

The product taken is "Men's Trousers/Pants/Jeans".

The classification of costs, along with behavior and relationship of these costs is provided in the following table:

Cost Name	Classification	Behavior	Relationship
Cloth and Buttons	Direct	Variable	The process of producing pants/trousers starts with the procurement of raw material such as cloth and buttons. All such items are stored in godown/warehouse. The stitching may also be done at the same godown/warehouse. Electricity charges will be incurred with respect to the usage at the godown/warehouse. Depending on the condition of machines used for stitching, the maintenance may be performed on regular/annual basis. Therefore, all of these costs are interrelated.
Stitching	Direct	Variable
Rent of Space Needed for Keeping Raw Material/Stitching	Indirect	Fixed
Annual Maintenance of Machines Needed for Stitching	Indirect	Fixed
Electricity	Indirect	Mixed

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Notes:

Please note that the actual nature/behavior of some of the above costs may vary depending on the production methodology (such as manual or automation).