E5-4 (LO 1), C Family Furniture Corporation incurred the following costs. 1. Wood used in the production of furniture. 2. Fuel used in delivery trucks. 3. Straight-line depreciation on factory building. 4. Screws used in the production of furniture. 5. Sales staff salaries. 6. Sales commissions. 7. Property taxes. 8. Insurance on buildings. 9. Hourly wages of furniture craftsmen. 10. Salaries of factory supervisors. 11. Utilities expense. 12. Telephone bill. Instructions Identify the costs above as variable, fixed, or mixed.
E5-4 (LO 1), C Family Furniture Corporation incurred the following costs. 1. Wood used in the production of furniture. 2. Fuel used in delivery trucks. 3. Straight-line depreciation on factory building. 4. Screws used in the production of furniture. 5. Sales staff salaries. 6. Sales commissions. 7. Property taxes. 8. Insurance on buildings. 9. Hourly wages of furniture craftsmen. 10. Salaries of factory supervisors. 11. Utilities expense. 12. Telephone bill. Instructions Identify the costs above as variable, fixed, or mixed.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:E5-4 (LO 1), C Family Furniture Corporation incurred the following costs.
1. Wood used in the production of furniture.
2. Fuel used in delivery trucks.
3. Straight-line depreciation on factory building.
4. Screws used in the production of furniture.
5. Sales staff salaries.
6. Sales commissions.
7. Property taxes.
8. Insurance on buildings.
9. Hourly wages of furniture craftsmen.
10. Salaries of factory supervisors.
11. Utilities expense.
12. Telephone bill.
Instructions
Identify the costs above as variable, fixed, or mixed.
Determine fixed costs and unit variable costs using the high-low method and prepare graph.
Expert Solution
Step 1
For accounting purposes, costs are defined as variable, fixed, or mixed costs. Variable costs are the per-unit cost that changes as the volume of production changes. Fixed costs are expenses that are fixed in nature like depreciation, staff salary, rent expenses, etc. Mixed costs are the combination of both variable cost components and fixed cost components, i.e. the costs are fixed up to a certain level and then they become variable costs after that level.
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