Fixed Cost: Fixed cost is that costs which will incur either product are produced or not. Fixed cost does not vary with increase or decrease in volume of the production, but fixed cost per unit varies. Examples of the fixed cost are depreciation on machinery, insurance premium and rent. Variable cost: Variable cost is that costs which are fixed for per unit. Variable cost increases with the increase in the number of units produced. Product cost: Product cost is the costs which are incurred to produce the product. This type of cost is direct cost. Direct material, direct labor and factory overheads depreciation on machinery are example of the product cost. Period costs: Period costs are not related to the manufacturing the product. These costs are related to administrate and selling. Depreciation on the office equipment, sales commission, office manager salary and interest expenses are example of the period cost. 1. To Identify: Nature of cost.

Question

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Answer 1

Question

Chapter 14, Problem 1PSB

To determine

Fixed Cost:

Fixed cost is that costs which will incur either product are produced or not. Fixed cost does not vary with increase or decrease in volume of the production, but fixed cost per unit varies. Examples of the fixed cost are depreciation on machinery, insurance premium and rent.

Variable cost:

Variable cost is that costs which are fixed for per unit. Variable cost increases with the increase in the number of units produced.

Product cost:

Product cost is the costs which are incurred to produce the product. This type of cost is direct cost. Direct material, direct labor and factory overheads depreciation on machinery are example of the product cost.

Period costs:

Period costs are not related to the manufacturing the product. These costs are related to administrate and selling. Depreciation on the office equipment, sales commission, office manager salary and interest expenses are example of the period cost.

1.

To Identify: Nature of cost.

Expert Solution & Answer

Explanation of Solution

1.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the production. Here, cost of the plastic for BDs will increase with respect to increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Plastic for BDs is related to the direct material and it related to the manufacturing the product. So, that is why it is related to the product cost.

2.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of the wages of the assembly increases with respect to the increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Here, wages of assembly worker is related to the manufacturing of the product. So, it will be product cost.

3.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the units. Here cost of factory rent is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Cost of factory rent is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

4

(a)

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, systems staff salary is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. System staff salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

5.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of labeling increases with respect to the increase in the number of the units. So, labeling is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Labeling are related to the purchase and manufacturing of the product. So, labeling is product cost.

6.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Rent cost of the equipment is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Rent cost of equipment is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

7.

(a)

The cost is fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Upper management salaries are fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is period cost.

Period cost is the cost which is not related to the manufacturing of the product. Upper management salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

8.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Annual fixed fee for cleaning service are fixed cost because it varies with increase or decrease of no of the units of the production.

(b)

The cont is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Annual fixed fee for cleaning service is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

9.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of sales commission increases with respect to the increase in the number of the units. So, sales commission is the variable cost.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Sales commission is not related to the manufacturing of the product. It is related to the administration and selling. So, it is the period cost

10.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Machinery depreciation (straight line) is fixed cost because per unity cost varies with increase or decrease of no of the units of the production.

(b)

The cost is the period cost.

Machinery deprecation incurs once in the year and it is not related to the manufacturing of the production. So, it is the period cost.

2.

Computation of the manufacturing per BDs cost,

Particulars	Amounts ($)	Amounts ($)
Variable costs:
Plastic for BDs	1,500
Wages for assembly workers	30,000
Labeling ($0.25 per BD)	3,750
Total variable costs (A)		35,250
Fixed cost:
Cost of factory rent	6,750
Annual fixed fee for cleaning service	4,520
Machinery deprecation, straight line method	18,000
Total fixed cost (B)		29,270
Total manufacturing cost $(A) + (B)$		64,520
Number of BDs (C)		15,000
Manufacturing cost per BD $\frac{(A) + (B)}{(C)}$		4.30

Table (1)

Hence, manufacturing cost per BDs is $4.30 per unit.

3.

Given,

Cost of plastic for BDs is $1,500.

Number of BDs are 15,000.

Formula to calculate the per unit BD,

$Per unit cost of BD = \frac{Total cost of the plastic for BD}{Number of BDs}$

Substitute, $1,500 for total cost for plastic for BS and 15,000 units for number of BDs,

$\begin{matrix} Per unit cost of the BD = \frac{$ 1, 500}{15, 000 units} \\ = $ 0.1 \end{matrix}$

Formula to calculate total cost for the BDs,

$Total cost of plastic BD = Per unit cost of BD \times Numbers of BDs$

Substitute, $0.1 for per unit cost of BD and 10,000 units for numbers of BDs,

$\begin{matrix} Total cost of plastic BD = $ 0.1 \times 10, 000 units \\ = $ 1, 000 \end{matrix}$

Hence, total cost of plastic for BD will be $1,000.

4

Given,

Factory rent is $6,750.

Number of BDs is 15,000.

Formula to calculate the per unit cast of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory}{Number of BD}$

Substitute, $6,750 for total cost of factory rent and 15,000 for number of BDs,

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{15, 000 units} \\ = $ 0.45 \end{matrix}$

Hence, per unit cost of the factory rent is $0.45.

Formula to calculate per unit cost of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory rent}{Number of BD}$

Substitute $6,750 for total cost of the factory rent and 10,000 for number of BD.

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{10, 000 units} \\ = $ 0.675 \end{matrix}$

Hence, per unit cost of the factory rent is $0.675.

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Students have asked these similar questions

Palladium, Incorporated recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records. Cost of Goods Sold $ 67,000 Work-in-Process Inventory, Beginning 11,300 Work-in-Process Inventory, Ending 9,400 Selling and Administrative Expense 16,000 Finished Goods Inventory, Ending 16,100 Finished Goods Inventory, Beginning ?question mark Direct Materials Used ?question mark Factory Overhead Applied 12,400 Operating Income 14,220 Direct Materials Inventory, Beginning 11,180 Direct Materials Inventory, Ending 6,140 Cost of Goods Manufactured 61,880 Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The Chief Financial Officer of Palladium, Incorporated has asked you to recalculate the following accounts and to report to him by the end of the day. What is the amount in the finished goods inventory at the beginning of the year?

Which of the following statements is incorrect regarding manufacturing overhead? Multiple Choice Manufacturing overhead includes both fixed and variable costs. Manufacturing overhead is an indirect cost to units or products. Actual overhead costs are used in the cost accounting process. Actual overhead costs tend to remain relatively constant over various output levels.

Palladium, Incorporated recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records. Cost of Goods Sold $ 72,500 Work-in-Process Inventory, Beginning 13,500 Work-in-Process Inventory, Ending 10,500 Selling and Administrative Expense 18,750 Finished Goods Inventory, Ending 19,125 Finished Goods Inventory, Beginning ?question mark Direct Materials Used ?question mark Factory Overhead Applied 13,500 Operating Income 14,825 Direct Materials Inventory, Beginning 11,675 Direct Materials Inventory, Ending 6,525 Cost of Goods Manufactured 67,050 Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The Chief Financial Officer of Palladium, Incorporated has asked you to recalculate the following accounts and to report to him by the end of the day. What is the amount of direct materials purchased?

Answer 2

Question

Chapter 14, Problem 1PSB

To determine

Fixed Cost:

Fixed cost is that costs which will incur either product are produced or not. Fixed cost does not vary with increase or decrease in volume of the production, but fixed cost per unit varies. Examples of the fixed cost are depreciation on machinery, insurance premium and rent.

Variable cost:

Variable cost is that costs which are fixed for per unit. Variable cost increases with the increase in the number of units produced.

Product cost:

Product cost is the costs which are incurred to produce the product. This type of cost is direct cost. Direct material, direct labor and factory overheads depreciation on machinery are example of the product cost.

Period costs:

Period costs are not related to the manufacturing the product. These costs are related to administrate and selling. Depreciation on the office equipment, sales commission, office manager salary and interest expenses are example of the period cost.

1.

To Identify: Nature of cost.

Expert Solution & Answer

Explanation of Solution

1.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the production. Here, cost of the plastic for BDs will increase with respect to increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Plastic for BDs is related to the direct material and it related to the manufacturing the product. So, that is why it is related to the product cost.

2.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of the wages of the assembly increases with respect to the increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Here, wages of assembly worker is related to the manufacturing of the product. So, it will be product cost.

3.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the units. Here cost of factory rent is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Cost of factory rent is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

4

(a)

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, systems staff salary is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. System staff salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

5.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of labeling increases with respect to the increase in the number of the units. So, labeling is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Labeling are related to the purchase and manufacturing of the product. So, labeling is product cost.

6.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Rent cost of the equipment is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Rent cost of equipment is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

7.

(a)

The cost is fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Upper management salaries are fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is period cost.

Period cost is the cost which is not related to the manufacturing of the product. Upper management salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

8.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Annual fixed fee for cleaning service are fixed cost because it varies with increase or decrease of no of the units of the production.

(b)

The cont is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Annual fixed fee for cleaning service is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

9.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of sales commission increases with respect to the increase in the number of the units. So, sales commission is the variable cost.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Sales commission is not related to the manufacturing of the product. It is related to the administration and selling. So, it is the period cost

10.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Machinery depreciation (straight line) is fixed cost because per unity cost varies with increase or decrease of no of the units of the production.

(b)

The cost is the period cost.

Machinery deprecation incurs once in the year and it is not related to the manufacturing of the production. So, it is the period cost.

2.

Computation of the manufacturing per BDs cost,

Particulars	Amounts ($)	Amounts ($)
Variable costs:
Plastic for BDs	1,500
Wages for assembly workers	30,000
Labeling ($0.25 per BD)	3,750
Total variable costs (A)		35,250
Fixed cost:
Cost of factory rent	6,750
Annual fixed fee for cleaning service	4,520
Machinery deprecation, straight line method	18,000
Total fixed cost (B)		29,270
Total manufacturing cost $(A) + (B)$		64,520
Number of BDs (C)		15,000
Manufacturing cost per BD $\frac{(A) + (B)}{(C)}$		4.30

Table (1)

Hence, manufacturing cost per BDs is $4.30 per unit.

3.

Given,

Cost of plastic for BDs is $1,500.

Number of BDs are 15,000.

Formula to calculate the per unit BD,

$Per unit cost of BD = \frac{Total cost of the plastic for BD}{Number of BDs}$

Substitute, $1,500 for total cost for plastic for BS and 15,000 units for number of BDs,

$\begin{matrix} Per unit cost of the BD = \frac{$ 1, 500}{15, 000 units} \\ = $ 0.1 \end{matrix}$

Formula to calculate total cost for the BDs,

$Total cost of plastic BD = Per unit cost of BD \times Numbers of BDs$

Substitute, $0.1 for per unit cost of BD and 10,000 units for numbers of BDs,

$\begin{matrix} Total cost of plastic BD = $ 0.1 \times 10, 000 units \\ = $ 1, 000 \end{matrix}$

Hence, total cost of plastic for BD will be $1,000.

4

Given,

Factory rent is $6,750.

Number of BDs is 15,000.

Formula to calculate the per unit cast of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory}{Number of BD}$

Substitute, $6,750 for total cost of factory rent and 15,000 for number of BDs,

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{15, 000 units} \\ = $ 0.45 \end{matrix}$

Hence, per unit cost of the factory rent is $0.45.

Formula to calculate per unit cost of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory rent}{Number of BD}$

Substitute $6,750 for total cost of the factory rent and 10,000 for number of BD.

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{10, 000 units} \\ = $ 0.675 \end{matrix}$

Hence, per unit cost of the factory rent is $0.675.

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Answer 3

Question

Chapter 14, Problem 1PSB

To determine

Fixed Cost:

Fixed cost is that costs which will incur either product are produced or not. Fixed cost does not vary with increase or decrease in volume of the production, but fixed cost per unit varies. Examples of the fixed cost are depreciation on machinery, insurance premium and rent.

Variable cost:

Variable cost is that costs which are fixed for per unit. Variable cost increases with the increase in the number of units produced.

Product cost:

Product cost is the costs which are incurred to produce the product. This type of cost is direct cost. Direct material, direct labor and factory overheads depreciation on machinery are example of the product cost.

Period costs:

Period costs are not related to the manufacturing the product. These costs are related to administrate and selling. Depreciation on the office equipment, sales commission, office manager salary and interest expenses are example of the period cost.

1.

To Identify: Nature of cost.

Expert Solution & Answer

Explanation of Solution

1.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the production. Here, cost of the plastic for BDs will increase with respect to increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Plastic for BDs is related to the direct material and it related to the manufacturing the product. So, that is why it is related to the product cost.

2.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of the wages of the assembly increases with respect to the increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Here, wages of assembly worker is related to the manufacturing of the product. So, it will be product cost.

3.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the units. Here cost of factory rent is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Cost of factory rent is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

4

(a)

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, systems staff salary is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. System staff salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

5.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of labeling increases with respect to the increase in the number of the units. So, labeling is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Labeling are related to the purchase and manufacturing of the product. So, labeling is product cost.

6.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Rent cost of the equipment is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Rent cost of equipment is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

7.

(a)

The cost is fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Upper management salaries are fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is period cost.

Period cost is the cost which is not related to the manufacturing of the product. Upper management salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

8.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Annual fixed fee for cleaning service are fixed cost because it varies with increase or decrease of no of the units of the production.

(b)

The cont is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Annual fixed fee for cleaning service is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

9.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of sales commission increases with respect to the increase in the number of the units. So, sales commission is the variable cost.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Sales commission is not related to the manufacturing of the product. It is related to the administration and selling. So, it is the period cost

10.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Machinery depreciation (straight line) is fixed cost because per unity cost varies with increase or decrease of no of the units of the production.

(b)

The cost is the period cost.

Machinery deprecation incurs once in the year and it is not related to the manufacturing of the production. So, it is the period cost.

2.

Computation of the manufacturing per BDs cost,

Particulars	Amounts ($)	Amounts ($)
Variable costs:
Plastic for BDs	1,500
Wages for assembly workers	30,000
Labeling ($0.25 per BD)	3,750
Total variable costs (A)		35,250
Fixed cost:
Cost of factory rent	6,750
Annual fixed fee for cleaning service	4,520
Machinery deprecation, straight line method	18,000
Total fixed cost (B)		29,270
Total manufacturing cost $(A) + (B)$		64,520
Number of BDs (C)		15,000
Manufacturing cost per BD $\frac{(A) + (B)}{(C)}$		4.30

Table (1)

Hence, manufacturing cost per BDs is $4.30 per unit.

3.

Given,

Cost of plastic for BDs is $1,500.

Number of BDs are 15,000.

Formula to calculate the per unit BD,

$Per unit cost of BD = \frac{Total cost of the plastic for BD}{Number of BDs}$

Substitute, $1,500 for total cost for plastic for BS and 15,000 units for number of BDs,

$\begin{matrix} Per unit cost of the BD = \frac{$ 1, 500}{15, 000 units} \\ = $ 0.1 \end{matrix}$

Formula to calculate total cost for the BDs,

$Total cost of plastic BD = Per unit cost of BD \times Numbers of BDs$

Substitute, $0.1 for per unit cost of BD and 10,000 units for numbers of BDs,

$\begin{matrix} Total cost of plastic BD = $ 0.1 \times 10, 000 units \\ = $ 1, 000 \end{matrix}$

Hence, total cost of plastic for BD will be $1,000.

4

Given,

Factory rent is $6,750.

Number of BDs is 15,000.

Formula to calculate the per unit cast of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory}{Number of BD}$

Substitute, $6,750 for total cost of factory rent and 15,000 for number of BDs,

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{15, 000 units} \\ = $ 0.45 \end{matrix}$

Hence, per unit cost of the factory rent is $0.45.

Formula to calculate per unit cost of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory rent}{Number of BD}$

Substitute $6,750 for total cost of the factory rent and 10,000 for number of BD.

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{10, 000 units} \\ = $ 0.675 \end{matrix}$

Hence, per unit cost of the factory rent is $0.675.

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Answer 4

Question

Chapter 14, Problem 1PSB

To determine

Fixed Cost:

Fixed cost is that costs which will incur either product are produced or not. Fixed cost does not vary with increase or decrease in volume of the production, but fixed cost per unit varies. Examples of the fixed cost are depreciation on machinery, insurance premium and rent.

Variable cost:

Variable cost is that costs which are fixed for per unit. Variable cost increases with the increase in the number of units produced.

Product cost:

Product cost is the costs which are incurred to produce the product. This type of cost is direct cost. Direct material, direct labor and factory overheads depreciation on machinery are example of the product cost.

Period costs:

Period costs are not related to the manufacturing the product. These costs are related to administrate and selling. Depreciation on the office equipment, sales commission, office manager salary and interest expenses are example of the period cost.

1.

To Identify: Nature of cost.

Expert Solution & Answer

Explanation of Solution

1.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the production. Here, cost of the plastic for BDs will increase with respect to increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Plastic for BDs is related to the direct material and it related to the manufacturing the product. So, that is why it is related to the product cost.

2.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of the wages of the assembly increases with respect to the increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Here, wages of assembly worker is related to the manufacturing of the product. So, it will be product cost.

3.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the units. Here cost of factory rent is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Cost of factory rent is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

4

(a)

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, systems staff salary is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. System staff salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

5.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of labeling increases with respect to the increase in the number of the units. So, labeling is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Labeling are related to the purchase and manufacturing of the product. So, labeling is product cost.

6.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Rent cost of the equipment is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Rent cost of equipment is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

7.

(a)

The cost is fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Upper management salaries are fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is period cost.

Period cost is the cost which is not related to the manufacturing of the product. Upper management salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

8.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Annual fixed fee for cleaning service are fixed cost because it varies with increase or decrease of no of the units of the production.

(b)

The cont is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Annual fixed fee for cleaning service is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

9.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of sales commission increases with respect to the increase in the number of the units. So, sales commission is the variable cost.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Sales commission is not related to the manufacturing of the product. It is related to the administration and selling. So, it is the period cost

10.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Machinery depreciation (straight line) is fixed cost because per unity cost varies with increase or decrease of no of the units of the production.

(b)

The cost is the period cost.

Machinery deprecation incurs once in the year and it is not related to the manufacturing of the production. So, it is the period cost.

2.

Computation of the manufacturing per BDs cost,

Particulars	Amounts ($)	Amounts ($)
Variable costs:
Plastic for BDs	1,500
Wages for assembly workers	30,000
Labeling ($0.25 per BD)	3,750
Total variable costs (A)		35,250
Fixed cost:
Cost of factory rent	6,750
Annual fixed fee for cleaning service	4,520
Machinery deprecation, straight line method	18,000
Total fixed cost (B)		29,270
Total manufacturing cost $(A) + (B)$		64,520
Number of BDs (C)		15,000
Manufacturing cost per BD $\frac{(A) + (B)}{(C)}$		4.30

Table (1)

Hence, manufacturing cost per BDs is $4.30 per unit.

3.

Given,

Cost of plastic for BDs is $1,500.

Number of BDs are 15,000.

Formula to calculate the per unit BD,

$Per unit cost of BD = \frac{Total cost of the plastic for BD}{Number of BDs}$

Substitute, $1,500 for total cost for plastic for BS and 15,000 units for number of BDs,

$\begin{matrix} Per unit cost of the BD = \frac{$ 1, 500}{15, 000 units} \\ = $ 0.1 \end{matrix}$

Formula to calculate total cost for the BDs,

$Total cost of plastic BD = Per unit cost of BD \times Numbers of BDs$

Substitute, $0.1 for per unit cost of BD and 10,000 units for numbers of BDs,

$\begin{matrix} Total cost of plastic BD = $ 0.1 \times 10, 000 units \\ = $ 1, 000 \end{matrix}$

Hence, total cost of plastic for BD will be $1,000.

4

Given,

Factory rent is $6,750.

Number of BDs is 15,000.

Formula to calculate the per unit cast of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory}{Number of BD}$

Substitute, $6,750 for total cost of factory rent and 15,000 for number of BDs,

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{15, 000 units} \\ = $ 0.45 \end{matrix}$

Hence, per unit cost of the factory rent is $0.45.

Formula to calculate per unit cost of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory rent}{Number of BD}$

Substitute $6,750 for total cost of the factory rent and 10,000 for number of BD.

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{10, 000 units} \\ = $ 0.675 \end{matrix}$

Hence, per unit cost of the factory rent is $0.675.

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Answer 5

Chapter 14, Problem 1PSB

To determine

Fixed Cost:

Fixed cost is that costs which will incur either product are produced or not. Fixed cost does not vary with increase or decrease in volume of the production, but fixed cost per unit varies. Examples of the fixed cost are depreciation on machinery, insurance premium and rent.

Variable cost:

Variable cost is that costs which are fixed for per unit. Variable cost increases with the increase in the number of units produced.

Product cost:

Product cost is the costs which are incurred to produce the product. This type of cost is direct cost. Direct material, direct labor and factory overheads depreciation on machinery are example of the product cost.

Period costs:

Period costs are not related to the manufacturing the product. These costs are related to administrate and selling. Depreciation on the office equipment, sales commission, office manager salary and interest expenses are example of the period cost.

1.

To Identify: Nature of cost.

Expert Solution & Answer

Explanation of Solution

1.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the production. Here, cost of the plastic for BDs will increase with respect to increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Plastic for BDs is related to the direct material and it related to the manufacturing the product. So, that is why it is related to the product cost.

2.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of the wages of the assembly increases with respect to the increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Here, wages of assembly worker is related to the manufacturing of the product. So, it will be product cost.

3.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the units. Here cost of factory rent is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Cost of factory rent is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

4

(a)

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, systems staff salary is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. System staff salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

5.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of labeling increases with respect to the increase in the number of the units. So, labeling is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Labeling are related to the purchase and manufacturing of the product. So, labeling is product cost.

6.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Rent cost of the equipment is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Rent cost of equipment is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

7.

(a)

The cost is fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Upper management salaries are fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is period cost.

Period cost is the cost which is not related to the manufacturing of the product. Upper management salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

8.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Annual fixed fee for cleaning service are fixed cost because it varies with increase or decrease of no of the units of the production.

(b)

The cont is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Annual fixed fee for cleaning service is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

9.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of sales commission increases with respect to the increase in the number of the units. So, sales commission is the variable cost.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Sales commission is not related to the manufacturing of the product. It is related to the administration and selling. So, it is the period cost

10.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Machinery depreciation (straight line) is fixed cost because per unity cost varies with increase or decrease of no of the units of the production.

(b)

The cost is the period cost.

Machinery deprecation incurs once in the year and it is not related to the manufacturing of the production. So, it is the period cost.

2.

Computation of the manufacturing per BDs cost,

Particulars	Amounts ($)	Amounts ($)
Variable costs:
Plastic for BDs	1,500
Wages for assembly workers	30,000
Labeling ($0.25 per BD)	3,750
Total variable costs (A)		35,250
Fixed cost:
Cost of factory rent	6,750
Annual fixed fee for cleaning service	4,520
Machinery deprecation, straight line method	18,000
Total fixed cost (B)		29,270
Total manufacturing cost $(A) + (B)$		64,520
Number of BDs (C)		15,000
Manufacturing cost per BD $\frac{(A) + (B)}{(C)}$		4.30

Table (1)

Hence, manufacturing cost per BDs is $4.30 per unit.

3.

Given,

Cost of plastic for BDs is $1,500.

Number of BDs are 15,000.

Formula to calculate the per unit BD,

$Per unit cost of BD = \frac{Total cost of the plastic for BD}{Number of BDs}$

Substitute, $1,500 for total cost for plastic for BS and 15,000 units for number of BDs,

$\begin{matrix} Per unit cost of the BD = \frac{$ 1, 500}{15, 000 units} \\ = $ 0.1 \end{matrix}$

Formula to calculate total cost for the BDs,

$Total cost of plastic BD = Per unit cost of BD \times Numbers of BDs$

Substitute, $0.1 for per unit cost of BD and 10,000 units for numbers of BDs,

$\begin{matrix} Total cost of plastic BD = $ 0.1 \times 10, 000 units \\ = $ 1, 000 \end{matrix}$

Hence, total cost of plastic for BD will be $1,000.

4

Given,

Factory rent is $6,750.

Number of BDs is 15,000.

Formula to calculate the per unit cast of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory}{Number of BD}$

Substitute, $6,750 for total cost of factory rent and 15,000 for number of BDs,

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{15, 000 units} \\ = $ 0.45 \end{matrix}$

Hence, per unit cost of the factory rent is $0.45.

Formula to calculate per unit cost of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory rent}{Number of BD}$

Substitute $6,750 for total cost of the factory rent and 10,000 for number of BD.

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{10, 000 units} \\ = $ 0.675 \end{matrix}$

Hence, per unit cost of the factory rent is $0.675.

Answer 6

Chapter 14, Problem 1PSB

To determine

Fixed Cost:

Fixed cost is that costs which will incur either product are produced or not. Fixed cost does not vary with increase or decrease in volume of the production, but fixed cost per unit varies. Examples of the fixed cost are depreciation on machinery, insurance premium and rent.

Variable cost:

Variable cost is that costs which are fixed for per unit. Variable cost increases with the increase in the number of units produced.

Product cost:

Product cost is the costs which are incurred to produce the product. This type of cost is direct cost. Direct material, direct labor and factory overheads depreciation on machinery are example of the product cost.

Period costs:

Period costs are not related to the manufacturing the product. These costs are related to administrate and selling. Depreciation on the office equipment, sales commission, office manager salary and interest expenses are example of the period cost.

1.

To Identify: Nature of cost.

Expert Solution & Answer

Explanation of Solution

1.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the production. Here, cost of the plastic for BDs will increase with respect to increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Plastic for BDs is related to the direct material and it related to the manufacturing the product. So, that is why it is related to the product cost.

2.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of the wages of the assembly increases with respect to the increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Here, wages of assembly worker is related to the manufacturing of the product. So, it will be product cost.

3.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the units. Here cost of factory rent is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Cost of factory rent is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

4

(a)

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, systems staff salary is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. System staff salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

5.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of labeling increases with respect to the increase in the number of the units. So, labeling is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Labeling are related to the purchase and manufacturing of the product. So, labeling is product cost.

6.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Rent cost of the equipment is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Rent cost of equipment is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

7.

(a)

The cost is fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Upper management salaries are fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is period cost.

Period cost is the cost which is not related to the manufacturing of the product. Upper management salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

8.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Annual fixed fee for cleaning service are fixed cost because it varies with increase or decrease of no of the units of the production.

(b)

The cont is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Annual fixed fee for cleaning service is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

9.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of sales commission increases with respect to the increase in the number of the units. So, sales commission is the variable cost.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Sales commission is not related to the manufacturing of the product. It is related to the administration and selling. So, it is the period cost

10.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Machinery depreciation (straight line) is fixed cost because per unity cost varies with increase or decrease of no of the units of the production.

(b)

The cost is the period cost.

Machinery deprecation incurs once in the year and it is not related to the manufacturing of the production. So, it is the period cost.

2.

Computation of the manufacturing per BDs cost,

Particulars	Amounts ($)	Amounts ($)
Variable costs:
Plastic for BDs	1,500
Wages for assembly workers	30,000
Labeling ($0.25 per BD)	3,750
Total variable costs (A)		35,250
Fixed cost:
Cost of factory rent	6,750
Annual fixed fee for cleaning service	4,520
Machinery deprecation, straight line method	18,000
Total fixed cost (B)		29,270
Total manufacturing cost $(A) + (B)$		64,520
Number of BDs (C)		15,000
Manufacturing cost per BD $\frac{(A) + (B)}{(C)}$		4.30

Table (1)

Hence, manufacturing cost per BDs is $4.30 per unit.

3.

Given,

Cost of plastic for BDs is $1,500.

Number of BDs are 15,000.

Formula to calculate the per unit BD,

$Per unit cost of BD = \frac{Total cost of the plastic for BD}{Number of BDs}$

Substitute, $1,500 for total cost for plastic for BS and 15,000 units for number of BDs,

$\begin{matrix} Per unit cost of the BD = \frac{$ 1, 500}{15, 000 units} \\ = $ 0.1 \end{matrix}$

Formula to calculate total cost for the BDs,

$Total cost of plastic BD = Per unit cost of BD \times Numbers of BDs$

Substitute, $0.1 for per unit cost of BD and 10,000 units for numbers of BDs,

$\begin{matrix} Total cost of plastic BD = $ 0.1 \times 10, 000 units \\ = $ 1, 000 \end{matrix}$

Hence, total cost of plastic for BD will be $1,000.

4

Given,

Factory rent is $6,750.

Number of BDs is 15,000.

Formula to calculate the per unit cast of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory}{Number of BD}$

Substitute, $6,750 for total cost of factory rent and 15,000 for number of BDs,

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{15, 000 units} \\ = $ 0.45 \end{matrix}$

Hence, per unit cost of the factory rent is $0.45.

Formula to calculate per unit cost of the factory rent,

$Per unit cost of factory rent = \frac{Total cost of factory rent}{Number of BD}$

Substitute $6,750 for total cost of the factory rent and 10,000 for number of BD.

$\begin{matrix} Per unit cost of factory rent = \frac{$ 6, 750}{10, 000 units} \\ = $ 0.675 \end{matrix}$

Hence, per unit cost of the factory rent is $0.675.

Answer 7

Chapter 14, Problem 1PSB

To determine

Fixed Cost:

Fixed cost is that costs which will incur either product are produced or not. Fixed cost does not vary with increase or decrease in volume of the production, but fixed cost per unit varies. Examples of the fixed cost are depreciation on machinery, insurance premium and rent.

Variable cost:

Variable cost is that costs which are fixed for per unit. Variable cost increases with the increase in the number of units produced.

Product cost:

Product cost is the costs which are incurred to produce the product. This type of cost is direct cost. Direct material, direct labor and factory overheads depreciation on machinery are example of the product cost.

Period costs:

Period costs are not related to the manufacturing the product. These costs are related to administrate and selling. Depreciation on the office equipment, sales commission, office manager salary and interest expenses are example of the period cost.

1.

To Identify: Nature of cost.

Answer 8

Expert Solution & Answer

Explanation of Solution

1.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the production. Here, cost of the plastic for BDs will increase with respect to increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Plastic for BDs is related to the direct material and it related to the manufacturing the product. So, that is why it is related to the product cost.

2.

(a)

The cost is the variable costs.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of the wages of the assembly increases with respect to the increase in the number of the units. So, it is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Here, wages of assembly worker is related to the manufacturing of the product. So, it will be product cost.

3.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the units. Here cost of factory rent is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Cost of factory rent is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

4

(a)

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, systems staff salary is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. System staff salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost.

5.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of labeling increases with respect to the increase in the number of the units. So, labeling is the variable cost.

(b)

The cost is the product cost.

Product cost is that cost which is directly related to the manufacturing the product. Labeling are related to the purchase and manufacturing of the product. So, labeling is product cost.

6.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Rent cost of the equipment is fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Rent cost of equipment is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

7.

(a)

The cost is fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Upper management salaries are fixed cost because it varies with increase or decrease of no of the units of the product.

(b)

The cost is period cost.

Period cost is the cost which is not related to the manufacturing of the product. Upper management salary is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

8.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Annual fixed fee for cleaning service are fixed cost because it varies with increase or decrease of no of the units of the production.

(b)

The cont is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Annual fixed fee for cleaning service is not related to the manufacturing of the product. It is related to the administration. So, it is the period cost

9.

(a)

The cost is the variable cost.

Variable cost remains per unit fixed. It increases with respect to the increase in the units of the product. Here, cost of sales commission increases with respect to the increase in the number of the units. So, sales commission is the variable cost.

(b)

The cost is the period cost.

Period cost is the cost which is not related to the manufacturing of the product. Sales commission is not related to the manufacturing of the product. It is related to the administration and selling. So, it is the period cost

10.

(a)

The cost is the fixed cost.

Fixed cast is that cost which varies per unites from increase or decrease of the no of the unity. Here, Machinery depreciation (straight line) is fixed cost because per unity cost varies with increase or decrease of no of the units of the production.

(b)

The cost is the period cost.

Machinery deprecation incurs once in the year and it is not related to the manufacturing of the production. So, it is the period cost.

2.

Computation of the manufacturing per BDs cost,

Particulars	Amounts ($)	Amounts ($)
Variable costs:
Plastic for BDs	1,500
Wages for assembly workers	30,000
Labeling ($0.25 per BD)	3,750
Total variable costs (A)		35,250
Fixed cost:
Cost of factory rent	6,750
Annual fixed fee for cleaning service	4,520
Machinery deprecation, straight line method	18,000
Total fixed cost (B)		29,270
Total manufacturing cost $(A) + (B)$		64,520
Number of BDs (C)		15,000
Manufacturing cost per BD $\frac{(A) + (B)}{(C)}$		4.30