1. Kool Kat Furniture manufactures sofas for distribution to several major retail chains. The following costs areincurred in the production and sale of sofas. For each cost listed below, determine if it is a Fixed Cost, a VariableCost, or a Mixed Cost.Fixed CostVariable CostMixed CostCostа.Wood for framing the sofasb.Salary of production vice presidentC.Rent on experimental equipment, $50 for every sofa producedd.Rental costs of warehouse, $30,000 a monthInsurance premiums on property, plant, & equipment, $25,000per year plus $25 per $25,000 of insured value over $16,000,000.е.Consulting fee of $120,000 paid to efficiency specialistsSalesperson's salary, $80,000 plus 4% of the selling price of eachf.g.sofa soldh.Janitorial supplies, $25 for each sofa producedi.Employer's FICA taxes on controller's salary of $180,000j.Fabric for sofa coveringsk. Hourly wages of sewing machine operatorsI.Sewing suppliesm. Salary of designersn.Foam rubber for cushion fillingsO.Electricity costs of $0.13 per kilowatt-hourp. Springsq. Property taxes on property, plant, and equipmentr.Straight-line depreciation on factory equipmentCartons used to ship sofasLegal fees paid to attorneys in defense of the company in apatent infringement suit, $25,000 plus $160 per hourS.t.

Fixed cost is the cost that does not change with the change in output. Whereas, variable cost is the…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

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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