Required: For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a direct cost or an indirect cost with respect to units of product. Three sample answers are provided for illustration. Cost Item Example: Direct labor Example: Executive salaries Example: Factory rent 1. Property taxes, factory. 2. Boxes used for packaging detergent produced by the company. 3. Salespersons' commissions. 4. Supervisor's salary, factory. 5. Depreciation, executive autos. 6. Wages of workers assembling computers. 7. Insurance, finished goods warehouses. 8. Lubricants for production equipment. 9. Advertising costs. 10. Microchips used in producing calculators. 11. Shipping costs on merchandise sold. 12. Magazine subscriptions, factory lunchroom. 13. Thread in a garment factory. 14. Executive life insurance. 15. Ink used in textbook production. 16. Fringe benefits, materials handling workers. 17. Yam used in sweater production. 18. Wages of receptionist, executive offices. Variable or Fixed Variable Fixed Fixed Fixed Variable Variable Fixed Fixed Variable Fixed Variable Fixed Variable Variable Fixed Variable Fixed Variable Variable Variable Fixed Selling Cost Yes Yes Yes Yes Administrative Cost Yes Yes Yes Yes Yes Yes Manufacturing Manufacturing (Product) Cost (Product) Cost Indirect Direct Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Required: For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a direct cost or an indirect cost with respect to units of product. Three sample answers are provided for illustration. Cost Item Example: Direct labor Example: Executive salaries Example: Factory rent 1. Property taxes, factory. 2. Boxes used for packaging detergent produced by the company. 3. Salespersons' commissions. 4. Supervisor's salary, factory. 5. Depreciation, executive autos. 6. Wages of workers assembling computers. 7. Insurance, finished goods warehouses. 8. Lubricants for production equipment. 9. Advertising costs. 10. Microchips used in producing calculators. 11. Shipping costs on merchandise sold. 12. Magazine subscriptions, factory lunchroom. 13. Thread in a garment factory. 14. Executive life insurance. 15. Ink used in textbook production. 16. Fringe benefits, materials handling workers. 17. Yam used in sweater production. 18. Wages of receptionist, executive offices. Variable or Fixed Variable Fixed Fixed Fixed Variable Variable Fixed Fixed Variable Fixed Variable Fixed Variable Variable Fixed Variable Fixed Variable Variable Variable Fixed Selling Cost Yes Yes Yes Yes Administrative Cost Yes Yes Yes Yes Yes Yes Manufacturing Manufacturing (Product) Cost (Product) Cost Indirect Direct Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Required:
For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then
whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a
direct cost or an indirect cost with respect to units of product. Three sample answers are provided for illustration.
Cost Item
Example: Direct labor
Example: Executive salaries
Example: Factory rent
1. Property taxes, factory.
2. Boxes used for packaging detergent produced by the company.
3. Salespersons' commissions.
4. Supervisor's salary, factory.
5. Depreciation, executive autos.
6. Wages of workers assembling computers.
7. Insurance, finished goods warehouses.
8. Lubricants for production equipment.
9. Advertising costs.
10. Microchips used in producing calculators.
11. Shipping costs on merchandise sold.
12. Magazine subscriptions, factory lunchroom.
13. Thread in a garment factory.
14. Executive life insurance.
15. Ink used in textbook production.
16. Fringe benefits, materials handling workers.
17. Yarn used in sweater production.
18. Wages of receptionist, executive offices.
Variable or
Fixed
Variable
Fixed
Fixed
Fixed
Variable
Variable
Fixed
Fixed
Variable
Fixed
Variable
Fixed
Variable
Variable
Fixed
Variable
Fixed
Variable
Variable
Variable
Fixed
Selling Cost
Yes
Yes
Yes
Yes
Administrative
Cost
Yes
Yes
Yes
Yes
Yes
Yes
Manufacturing Manufacturing
(Product) Cost (Product) Cost
Direct
Indirect
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
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