You have been asked by management to classify the costs associated with the start-up of this new product line. Using the cost information provided below, classify each cost under the appropriate heading according to the chart provided below. Note that some costs may be classified under more than one heading. For example, a cost may be a fixed cost and a period cost. Name of cost Variable Cost Fixed Cost Direct Materials Direct Labor Factory Overhead Period Cost Prime Cost Conversion Cost Carlson “New Product” Cost Information Cost Amount Cost Type Depreciation on Building (annual) $ 10,000 Direct Labor Cost (per unit) $ 75 Direct Materials Cost (per unit) $ 60 Factory Utilities (per unit) $ 8 Indirect Materials (per unit) $ 4 Interest on Investments (annual) $3,000 Machinery Rental (monthly) $ 6,000 Marketing (annual) $ 35,000 Rent from Tenant (annual) $40,000 Shipping (per unit) $3 Storage Facility (monthly) $700 Supervisor Salary (annual) $30,00
You have been asked by management to classify the costs associated with the start-up of this new product line. Using the cost information provided below, classify each cost under the appropriate heading according to the chart provided below. Note that some costs may be classified under more than one heading. For example, a cost may be a fixed cost and a period cost.
|
Name of cost |
Variable Cost |
Fixed Cost |
Direct Materials |
Direct Labor |
Factory |
Period Cost |
Prime Cost |
Conversion Cost |
Carlson “New Product” Cost Information
|
Cost |
Amount |
Cost Type |
|
|
$ 10,000 |
|
|
Direct Labor Cost (per unit) |
$ 75 |
|
|
Direct Materials Cost (per unit) |
$ 60 |
|
|
Factory Utilities (per unit) |
$ 8 |
|
|
Indirect Materials (per unit) |
$ 4 |
|
|
Interest on Investments (annual) |
$3,000 |
|
|
Machinery Rental (monthly) |
$ 6,000 |
|
|
Marketing (annual) |
$ 35,000 |
|
|
Rent from Tenant (annual) |
$40,000 |
|
|
Shipping (per unit) |
$3 |
|
|
Storage Facility (monthly) |
$700 |
|
|
Supervisor Salary (annual) |
$30,00 |
|
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