#### Cost Analysis ExerciseIn this exercise, you are provided with different cost descriptions and possible measures of activity. Your task is to determine whether each listed cost is mainly fixed or variable with respect to the given measure of activity. Indicate your choice by marking the respective column. Additionally, provide an explanation for why you classified each cost as fixed or variable.### Cost Description Table| Cost Description | Possible Measure of Activity ||--------------------------------------------------------------------|--------------------------------|| 1. Salary of production manager at a surfboard manufacturer | Surfboards produced || 2. Cost of solder used in making computers | Computers produced || 3. Cost of dough used at a pizza shop | Pizzas cooked || 4. Janitorial wages at a surfboard manufacturer | Surfboards produced || 5. Salary of the controller at a hospital | Number of patients || 6. Cost of sales at an electronics store | Dollar sales || 7. Cost of testing materials used in a medical lab | Tests run || 8. Cost of heating an electronics store | Dollar sales || 9. Cost of electricity for production equipment at a surfboard manufacturer | Surfboards produced || 10. Depreciation on shelving at a bookstore | Dollar sales |### InstructionsFor each item above, indicate whether the cost is **MAINLY** fixed or variable with respect to the possible measure of activity listed. Mark your choice with an **X** in the provided table below.| # | Fixed | Variable | Comment ||----|-------|----------|---------------|| 1 | | | || 2 | | | || 3 | | | || 4 | | | || 5 | | | || 6 | | | || 7 | | | || 8 | | | || 9 | | | || 10 | | | |### Explanation1. **Salary of Production Manager at a Surfboard Manufacturer**: Typically, the salary of a production manager is a fixed cost as it does not change with the number of surfboards produced.2. **Cost of Solder ### Educational Resource: Cost Analysis Table#### Instructions:For each item listed, indicate whether the cost is **mainly fixed** or **variable** with respect to the possible measure of activity mentioned next to it. For each question, select either fixed or variable and mark with an "X". Provide an explanation for your choice in the “Comment” column.#### Cost Classification Table:| Question # | Fixed | Variable | Comment ||------------|-------|----------|---------|| 1 | | | || 2 | | | || 3 | | | || 4 | | | || 5 | | | || 6 | | | || 7 | | | || 8 | | | || 9 | | | || 10 | | | |Use this table to help categorize costs accurately for various economic activities. This analysis is pivotal in budgeting and resource allocation within organizations. Please ensure all entries reflect a clear understanding of the cost behavior.

The cost can be classified based on nature like fixed costs or variable costs. The cost is variable…

9 6 7 8 5 4 3 Question # 1 2 For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it. For each question above, select either fixed or variable and mark with an X. Explain your choice in the column marked comment. Fixed Variable Comment

9 6 7 8 5 4 3 Question # 1 2 For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it. For each question above, select either fixed or variable and mark with an X. Explain your choice in the column marked comment. Fixed Variable Comment

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

#### Cost Analysis Exercise

In this exercise, you are provided with different cost descriptions and possible measures of activity. Your task is to determine whether each listed cost is mainly fixed or variable with respect to the given measure of activity. Indicate your choice by marking the respective column. Additionally, provide an explanation for why you classified each cost as fixed or variable.

### Cost Description Table

| Cost Description | Possible Measure of Activity |
|--------------------------------------------------------------------|--------------------------------|
| 1. Salary of production manager at a surfboard manufacturer | Surfboards produced |
| 2. Cost of solder used in making computers | Computers produced |
| 3. Cost of dough used at a pizza shop | Pizzas cooked |
| 4. Janitorial wages at a surfboard manufacturer | Surfboards produced |
| 5. Salary of the controller at a hospital | Number of patients |
| 6. Cost of sales at an electronics store | Dollar sales |
| 7. Cost of testing materials used in a medical lab | Tests run |
| 8. Cost of heating an electronics store | Dollar sales |
| 9. Cost of electricity for production equipment at a surfboard manufacturer | Surfboards produced |
| 10. Depreciation on shelving at a bookstore | Dollar sales |

### Instructions

For each item above, indicate whether the cost is **MAINLY** fixed or variable with respect to the possible measure of activity listed. Mark your choice with an **X** in the provided table below.

| # | Fixed | Variable | Comment |
|----|-------|----------|---------------|
| 1 | | | |
| 2 | | | |
| 3 | | | |
| 4 | | | |
| 5 | | | |
| 6 | | | |
| 7 | | | |
| 8 | | | |
| 9 | | | |
| 10 | | | |

### Explanation

1. **Salary of Production Manager at a Surfboard Manufacturer**: Typically, the salary of a production manager is a fixed cost as it does not change with the number of surfboards produced.
2. **Cost of Solder

### Educational Resource: Cost Analysis Table

#### Instructions:
For each item listed, indicate whether the cost is **mainly fixed** or **variable** with respect to the possible measure of activity mentioned next to it. For each question, select either fixed or variable and mark with an "X". Provide an explanation for your choice in the “Comment” column.

#### Cost Classification Table:
| Question # | Fixed | Variable | Comment |
|------------|-------|----------|---------|
| 1 | | | |
| 2 | | | |
| 3 | | | |
| 4 | | | |
| 5 | | | |
| 6 | | | |
| 7 | | | |
| 8 | | | |
| 9 | | | |
| 10 | | | |

Use this table to help categorize costs accurately for various economic activities. This analysis is pivotal in budgeting and resource allocation within organizations. Please ensure all entries reflect a clear understanding of the cost behavior.

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