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1. Kool Kat Furniture manufactures sofas for distribution to several major retail chains. The following costs are incurred in the production and sale of sofas. For each cost listed below, determine if it is a Fixed Cost, a Variable Cost, or a Mixed Cost.

1. Kool Kat Furniture manufactures sofas for distribution to several major retail chains. The following costs are incurred in the production and sale of sofas. For each cost listed below, determine if it is a Fixed Cost, a Variable Cost, or a Mixed Cost.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Kool Kat Furniture manufactures sofas for distribution to several major retail chains. The following costs are incurred in the production and sale of sofas. For each cost listed below, determine if it is a Fixed Cost, a Variable Cost, or a Mixed Cost. Fixed Cost Variable Cost Mixed Cost Cost а. Wood for framing the sofas b. Salary of production vice president C. Rent on experimental equipment, $50 for every sofa produced d. Rental costs of warehouse, $30,000 a month Insurance premiums on property, plant, & equipment, $25,000 per year plus $25 per $25,000 of insured value over $16,000,000. е. Consulting fee of $120,000 paid to efficiency specialists Salesperson's salary, $80,000 plus 4% of the selling price of each f. g. sofa sold h. Janitorial supplies, $25 for each sofa produced i. Employer's FICA taxes on controller's salary of $180,000 j. Fabric for sofa coverings k. Hourly wages of sewing machine operators I. Sewing supplies m. Salary of designers n. Foam rubber for cushion fillings O. Electricity costs of $0.13 per kilowatt-hour p. Springs q. Property taxes on property, plant, and equipment r. Straight-line depreciation on factory equipment Cartons used to ship sofas Legal fees paid to attorneys in defense of the company in a patent infringement suit, $25,000 plus $160 per hour S. t.
Transcribed Image Text:1. Kool Kat Furniture manufactures sofas for distribution to several major retail chains. The following costs are incurred in the production and sale of sofas. For each cost listed below, determine if it is a Fixed Cost, a Variable Cost, or a Mixed Cost. Fixed Cost Variable Cost Mixed Cost Cost а. Wood for framing the sofas b. Salary of production vice president C. Rent on experimental equipment, $50 for every sofa produced d. Rental costs of warehouse, $30,000 a month Insurance premiums on property, plant, & equipment, $25,000 per year plus $25 per $25,000 of insured value over $16,000,000. е. Consulting fee of $120,000 paid to efficiency specialists Salesperson's salary, $80,000 plus 4% of the selling price of each f. g. sofa sold h. Janitorial supplies, $25 for each sofa produced i. Employer's FICA taxes on controller's salary of $180,000 j. Fabric for sofa coverings k. Hourly wages of sewing machine operators I. Sewing supplies m. Salary of designers n. Foam rubber for cushion fillings O. Electricity costs of $0.13 per kilowatt-hour p. Springs q. Property taxes on property, plant, and equipment r. Straight-line depreciation on factory equipment Cartons used to ship sofas Legal fees paid to attorneys in defense of the company in a patent infringement suit, $25,000 plus $160 per hour S. t.
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