Gibson Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $83,200 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,540 tents in January and 1,130 tents in February. For the entire year, the company expects to produce 13,000 tents. Required a. As the number of tents inspected increases, does the amount of fixed cost increase, decrease, or stay the same? b. As the number of tents inspected increases, does the fixed cost per unit increase, decrease, or stay the same? c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? d. How much of the expert's salary should be allocated to tents produced in January and February? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D How much of the expert's salary should be allocated to tents produced in January and February? Note: Do not round intermediate calculations. Amount Allocated Month January February $ $ 83,200 × 72,320 < Required C Required D >
Gibson Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $83,200 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,540 tents in January and 1,130 tents in February. For the entire year, the company expects to produce 13,000 tents. Required a. As the number of tents inspected increases, does the amount of fixed cost increase, decrease, or stay the same? b. As the number of tents inspected increases, does the fixed cost per unit increase, decrease, or stay the same? c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? d. How much of the expert's salary should be allocated to tents produced in January and February? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D How much of the expert's salary should be allocated to tents produced in January and February? Note: Do not round intermediate calculations. Amount Allocated Month January February $ $ 83,200 × 72,320 < Required C Required D >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Gibson Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing
program. The company pays a quality control expert $83,200 per year to inspect completed tents before they are shipped
to customers. Assume that the company completed 1,540 tents in January and 1,130 tents in February. For the entire year,
the company expects to produce 13,000 tents.
Required
a. As the number of tents inspected increases, does the amount of fixed cost increase, decrease, or stay the same?
b. As the number of tents inspected increases, does the fixed cost per unit increase, decrease, or stay the same?
c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost?
d. How much of the expert's salary should be allocated to tents produced in January and February?
Complete this question by entering your answers in the tabs below.
Required A Required B Required C
Required D
How much of the expert's salary should be allocated to tents produced in January and February?
Note: Do not round intermediate calculations.
Month
Amount
Allocated
January
February
$
83,200 x
$
72,320 x
< Required C
Required D >
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