- There are broadly two costs associated during production and selling of the final product. They are product costs and period costs. Product costs are the costs that are directly associated with the production of a product, whereas period costs are the costs that are not included in the production process like selling expense, administrative expense etc. To determine:- Here, in the given problem, we are required to classify each of the costs given to us as either variable or fixed and either product or fixed costs for True Beat.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 18, Problem 1APSA

To determine

Introduction:-

There are broadly two costs associated during production and selling of the final product. They are product costs and period costs. Product costs are the costs that are directly associated with the production of a product, whereas period costs are the costs that are not included in the production process like selling expense, administrative expense etc.

To determine:-

Here, in the given problem, we are required to classify each of the costs given to us as either variable or fixed and either product or fixed costs for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Following table will classify each cost as either fixed or variable and then product or period:-

	Costs	Variable or Fixed		Product or period
		Variable	Fixed	Product	Period
1	Plastic for casing	$17000		$17000
2	Wages of Assembly workers	$82000		$82000
3	Property taxes on factory		$5000		$5000
4	Accounting Staff salaries		$35000		$35000
5	Drum stands (1000 stand purchased)	$26000		$26000
6	Rent cost of equipment for sales staff		$10000		$10000
7	Upper management salaries		$125000		$125000
8	Annual flat fee for factory maintenance service		$10000	$10000
9	Sales commission ($15 per unit)	$15000			$15000
10	Machinery Depreciation- Straight line		$40000	$40000

Explanation of Solution

Explanation:-

Products costs are sometimes bifurcated into variable costs or fixed costs and mainly include Direct and indirect raw material costs, direct and indirect labour costs and factory overheads or manufacturing overheads. On the other hand period costs are further bifurcated into selling expenses and administrative expenses.

Following table will provide justification for segregating costs into fixed or variable and period or product:-

1	Plastic for casing	Plastic for casing is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
2	Wages of Assembly workers	Wages of assembly workers is a variable cost as they will change as per the production levels. Also it is a product cost as this cost is attributed to production.
3	Property taxes on factory	Property taxes on factory are a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
4	Accounting Staff salaries	Accounting staff salaries is a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
5	Drum stands (1000 stand purchased)	Purchase of drums stands is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
6	Rent cost of equipment for sales staff	It is a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
7	Upper management salaries	Upper management salaries are a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
8	Annual flat fee for factory maintenance service	It is a fixed cost as it will be incurred irrespective of whether production takes place or not. However it is a product cost as it is directly associated with production.
9	Sales commission ($15 per unit)	Sales commission is a variable cost as it will depend on the number of units sold. But it is a period cost as it not associated with production.
10	Machinery Depreciation- Straight line	Machine depreciation is fixed cost as it will be incurred even if the machine is not working. However, it is product cost because machine is used in production.

Conclusion

Conclusion:-

Hence, product costs are those which directly take part in production and period costs are those which are to be incurred irrespective of the fact that the production is taking place or not.

To determine

To determine:-

Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Manufacturing costs per drum set is $180 per drum set.

Explanation of Solution

Explanation:-

Manufacturing costs essentially includes direct materials costs, direct labour costs and manufacturing overheads like indirect materials, indirect labour etc.

Now, here manufacturing costs per unit can be calculated by dividing the total manufacturing costs by the total number of units produced.

Plastic for casing	17000
Wages of assembly workers	82000
Property taxes on factory	5000
Drum stands purchased	26000
Machinery depreciation	40000
Annual flat fee for factory maintenance service	10000
Total manufacturing cost	180000

$M a n u f a c t u r i n g c o s t p e r u n i t = 180000 \div 1000 u n i t s$

$= $ 180 p e r d r u m s e t$

Conclusion

Conclusion:-

Hence, manufacturing costs include direct material and labour and overheads essential for producing a finished product.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of plastic for casings is $20, 400. And the per unit cost of plastic for casings is $17.

Explanation of Solution

Explanation:-

In the current year total cost of plastic for casings is $17000 for 1000 drum sets. Therefore, per unit cost of plastic for casing is:-

$= 17000 \div 1000$

$= $ 17 p e r u n i t$

Since, plastic for casings is a variable cost; it will increase with the increase in production. But, per unit cost will remain same.

Now, total cost of plastic for casings assuming 1200 drum sets are produced is as follows:-

$N u m b e r o f u n i t s p r o d u c e d \times P e r u n i t c o s t o f p l a s t i c f o r c a s i n g s$

$= 1200 \times 17$

$= $ 20, 400$

Conclusion

Conclusion:-

Hence, per unit cost of plastic for casing will remain same at $17, but the total cost of plastic for casings would increase to $20, 400 with production of 1200 drum sets.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of property taxes would be $5, 000. And the per unit cost of property taxes would be $4.1667.

Explanation of Solution

Explanation:-

In the current year total cost of property taxes is $5000 for 1000 drum sets..

Since, property taxes on factory are a fixed cost; it will not increase with the increase in production. However, per unit cost will decrease with the increase in production.

Now, per unit cost of property taxes assuming 1200 drum sets are produced is as follows:-

$= T o t a l p r o p e r t y t a x e s \div N u m b e r o f d r u m s e t s p r o d u c e d$

$= 5000 \div 1200$

$= $ 4.1667$

Conclusion

Conclusion:-

Hence, per unit cost of property taxes will decrease to $4.1667, but the total cost of property taxes would remain same at $5000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Financial Accounting Question

What is the economic order quantity of this accounting question?

The following information is available for... Please provide answer the accounting question

Answer 2

Question

Chapter 18, Problem 1APSA

To determine

Introduction:-

There are broadly two costs associated during production and selling of the final product. They are product costs and period costs. Product costs are the costs that are directly associated with the production of a product, whereas period costs are the costs that are not included in the production process like selling expense, administrative expense etc.

To determine:-

Here, in the given problem, we are required to classify each of the costs given to us as either variable or fixed and either product or fixed costs for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Following table will classify each cost as either fixed or variable and then product or period:-

	Costs	Variable or Fixed		Product or period
		Variable	Fixed	Product	Period
1	Plastic for casing	$17000		$17000
2	Wages of Assembly workers	$82000		$82000
3	Property taxes on factory		$5000		$5000
4	Accounting Staff salaries		$35000		$35000
5	Drum stands (1000 stand purchased)	$26000		$26000
6	Rent cost of equipment for sales staff		$10000		$10000
7	Upper management salaries		$125000		$125000
8	Annual flat fee for factory maintenance service		$10000	$10000
9	Sales commission ($15 per unit)	$15000			$15000
10	Machinery Depreciation- Straight line		$40000	$40000

Explanation of Solution

Explanation:-

Products costs are sometimes bifurcated into variable costs or fixed costs and mainly include Direct and indirect raw material costs, direct and indirect labour costs and factory overheads or manufacturing overheads. On the other hand period costs are further bifurcated into selling expenses and administrative expenses.

Following table will provide justification for segregating costs into fixed or variable and period or product:-

1	Plastic for casing	Plastic for casing is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
2	Wages of Assembly workers	Wages of assembly workers is a variable cost as they will change as per the production levels. Also it is a product cost as this cost is attributed to production.
3	Property taxes on factory	Property taxes on factory are a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
4	Accounting Staff salaries	Accounting staff salaries is a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
5	Drum stands (1000 stand purchased)	Purchase of drums stands is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
6	Rent cost of equipment for sales staff	It is a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
7	Upper management salaries	Upper management salaries are a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
8	Annual flat fee for factory maintenance service	It is a fixed cost as it will be incurred irrespective of whether production takes place or not. However it is a product cost as it is directly associated with production.
9	Sales commission ($15 per unit)	Sales commission is a variable cost as it will depend on the number of units sold. But it is a period cost as it not associated with production.
10	Machinery Depreciation- Straight line	Machine depreciation is fixed cost as it will be incurred even if the machine is not working. However, it is product cost because machine is used in production.

Conclusion

Conclusion:-

Hence, product costs are those which directly take part in production and period costs are those which are to be incurred irrespective of the fact that the production is taking place or not.

To determine

To determine:-

Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Manufacturing costs per drum set is $180 per drum set.

Explanation of Solution

Explanation:-

Manufacturing costs essentially includes direct materials costs, direct labour costs and manufacturing overheads like indirect materials, indirect labour etc.

Now, here manufacturing costs per unit can be calculated by dividing the total manufacturing costs by the total number of units produced.

Plastic for casing	17000
Wages of assembly workers	82000
Property taxes on factory	5000
Drum stands purchased	26000
Machinery depreciation	40000
Annual flat fee for factory maintenance service	10000
Total manufacturing cost	180000

$M a n u f a c t u r i n g c o s t p e r u n i t = 180000 \div 1000 u n i t s$

$= $ 180 p e r d r u m s e t$

Conclusion

Conclusion:-

Hence, manufacturing costs include direct material and labour and overheads essential for producing a finished product.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of plastic for casings is $20, 400. And the per unit cost of plastic for casings is $17.

Explanation of Solution

Explanation:-

In the current year total cost of plastic for casings is $17000 for 1000 drum sets. Therefore, per unit cost of plastic for casing is:-

$= 17000 \div 1000$

$= $ 17 p e r u n i t$

Since, plastic for casings is a variable cost; it will increase with the increase in production. But, per unit cost will remain same.

Now, total cost of plastic for casings assuming 1200 drum sets are produced is as follows:-

$N u m b e r o f u n i t s p r o d u c e d \times P e r u n i t c o s t o f p l a s t i c f o r c a s i n g s$

$= 1200 \times 17$

$= $ 20, 400$

Conclusion

Conclusion:-

Hence, per unit cost of plastic for casing will remain same at $17, but the total cost of plastic for casings would increase to $20, 400 with production of 1200 drum sets.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of property taxes would be $5, 000. And the per unit cost of property taxes would be $4.1667.

Explanation of Solution

Explanation:-

In the current year total cost of property taxes is $5000 for 1000 drum sets..

Since, property taxes on factory are a fixed cost; it will not increase with the increase in production. However, per unit cost will decrease with the increase in production.

Now, per unit cost of property taxes assuming 1200 drum sets are produced is as follows:-

$= T o t a l p r o p e r t y t a x e s \div N u m b e r o f d r u m s e t s p r o d u c e d$

$= 5000 \div 1200$

$= $ 4.1667$

Conclusion

Conclusion:-

Hence, per unit cost of property taxes will decrease to $4.1667, but the total cost of property taxes would remain same at $5000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 18, Problem 1APSA

To determine

Introduction:-

There are broadly two costs associated during production and selling of the final product. They are product costs and period costs. Product costs are the costs that are directly associated with the production of a product, whereas period costs are the costs that are not included in the production process like selling expense, administrative expense etc.

To determine:-

Here, in the given problem, we are required to classify each of the costs given to us as either variable or fixed and either product or fixed costs for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Following table will classify each cost as either fixed or variable and then product or period:-

	Costs	Variable or Fixed		Product or period
		Variable	Fixed	Product	Period
1	Plastic for casing	$17000		$17000
2	Wages of Assembly workers	$82000		$82000
3	Property taxes on factory		$5000		$5000
4	Accounting Staff salaries		$35000		$35000
5	Drum stands (1000 stand purchased)	$26000		$26000
6	Rent cost of equipment for sales staff		$10000		$10000
7	Upper management salaries		$125000		$125000
8	Annual flat fee for factory maintenance service		$10000	$10000
9	Sales commission ($15 per unit)	$15000			$15000
10	Machinery Depreciation- Straight line		$40000	$40000

Explanation of Solution

Explanation:-

Products costs are sometimes bifurcated into variable costs or fixed costs and mainly include Direct and indirect raw material costs, direct and indirect labour costs and factory overheads or manufacturing overheads. On the other hand period costs are further bifurcated into selling expenses and administrative expenses.

Following table will provide justification for segregating costs into fixed or variable and period or product:-

1	Plastic for casing	Plastic for casing is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
2	Wages of Assembly workers	Wages of assembly workers is a variable cost as they will change as per the production levels. Also it is a product cost as this cost is attributed to production.
3	Property taxes on factory	Property taxes on factory are a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
4	Accounting Staff salaries	Accounting staff salaries is a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
5	Drum stands (1000 stand purchased)	Purchase of drums stands is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
6	Rent cost of equipment for sales staff	It is a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
7	Upper management salaries	Upper management salaries are a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
8	Annual flat fee for factory maintenance service	It is a fixed cost as it will be incurred irrespective of whether production takes place or not. However it is a product cost as it is directly associated with production.
9	Sales commission ($15 per unit)	Sales commission is a variable cost as it will depend on the number of units sold. But it is a period cost as it not associated with production.
10	Machinery Depreciation- Straight line	Machine depreciation is fixed cost as it will be incurred even if the machine is not working. However, it is product cost because machine is used in production.

Conclusion

Conclusion:-

Hence, product costs are those which directly take part in production and period costs are those which are to be incurred irrespective of the fact that the production is taking place or not.

To determine

To determine:-

Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Manufacturing costs per drum set is $180 per drum set.

Explanation of Solution

Explanation:-

Manufacturing costs essentially includes direct materials costs, direct labour costs and manufacturing overheads like indirect materials, indirect labour etc.

Now, here manufacturing costs per unit can be calculated by dividing the total manufacturing costs by the total number of units produced.

Plastic for casing	17000
Wages of assembly workers	82000
Property taxes on factory	5000
Drum stands purchased	26000
Machinery depreciation	40000
Annual flat fee for factory maintenance service	10000
Total manufacturing cost	180000

$M a n u f a c t u r i n g c o s t p e r u n i t = 180000 \div 1000 u n i t s$

$= $ 180 p e r d r u m s e t$

Conclusion

Conclusion:-

Hence, manufacturing costs include direct material and labour and overheads essential for producing a finished product.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of plastic for casings is $20, 400. And the per unit cost of plastic for casings is $17.

Explanation of Solution

Explanation:-

In the current year total cost of plastic for casings is $17000 for 1000 drum sets. Therefore, per unit cost of plastic for casing is:-

$= 17000 \div 1000$

$= $ 17 p e r u n i t$

Since, plastic for casings is a variable cost; it will increase with the increase in production. But, per unit cost will remain same.

Now, total cost of plastic for casings assuming 1200 drum sets are produced is as follows:-

$N u m b e r o f u n i t s p r o d u c e d \times P e r u n i t c o s t o f p l a s t i c f o r c a s i n g s$

$= 1200 \times 17$

$= $ 20, 400$

Conclusion

Conclusion:-

Hence, per unit cost of plastic for casing will remain same at $17, but the total cost of plastic for casings would increase to $20, 400 with production of 1200 drum sets.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of property taxes would be $5, 000. And the per unit cost of property taxes would be $4.1667.

Explanation of Solution

Explanation:-

In the current year total cost of property taxes is $5000 for 1000 drum sets..

Since, property taxes on factory are a fixed cost; it will not increase with the increase in production. However, per unit cost will decrease with the increase in production.

Now, per unit cost of property taxes assuming 1200 drum sets are produced is as follows:-

$= T o t a l p r o p e r t y t a x e s \div N u m b e r o f d r u m s e t s p r o d u c e d$

$= 5000 \div 1200$

$= $ 4.1667$

Conclusion

Conclusion:-

Hence, per unit cost of property taxes will decrease to $4.1667, but the total cost of property taxes would remain same at $5000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 18, Problem 1APSA

To determine

Introduction:-

There are broadly two costs associated during production and selling of the final product. They are product costs and period costs. Product costs are the costs that are directly associated with the production of a product, whereas period costs are the costs that are not included in the production process like selling expense, administrative expense etc.

To determine:-

Here, in the given problem, we are required to classify each of the costs given to us as either variable or fixed and either product or fixed costs for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Following table will classify each cost as either fixed or variable and then product or period:-

	Costs	Variable or Fixed		Product or period
		Variable	Fixed	Product	Period
1	Plastic for casing	$17000		$17000
2	Wages of Assembly workers	$82000		$82000
3	Property taxes on factory		$5000		$5000
4	Accounting Staff salaries		$35000		$35000
5	Drum stands (1000 stand purchased)	$26000		$26000
6	Rent cost of equipment for sales staff		$10000		$10000
7	Upper management salaries		$125000		$125000
8	Annual flat fee for factory maintenance service		$10000	$10000
9	Sales commission ($15 per unit)	$15000			$15000
10	Machinery Depreciation- Straight line		$40000	$40000

Explanation of Solution

Explanation:-

Products costs are sometimes bifurcated into variable costs or fixed costs and mainly include Direct and indirect raw material costs, direct and indirect labour costs and factory overheads or manufacturing overheads. On the other hand period costs are further bifurcated into selling expenses and administrative expenses.

Following table will provide justification for segregating costs into fixed or variable and period or product:-

1	Plastic for casing	Plastic for casing is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
2	Wages of Assembly workers	Wages of assembly workers is a variable cost as they will change as per the production levels. Also it is a product cost as this cost is attributed to production.
3	Property taxes on factory	Property taxes on factory are a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
4	Accounting Staff salaries	Accounting staff salaries is a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
5	Drum stands (1000 stand purchased)	Purchase of drums stands is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
6	Rent cost of equipment for sales staff	It is a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
7	Upper management salaries	Upper management salaries are a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
8	Annual flat fee for factory maintenance service	It is a fixed cost as it will be incurred irrespective of whether production takes place or not. However it is a product cost as it is directly associated with production.
9	Sales commission ($15 per unit)	Sales commission is a variable cost as it will depend on the number of units sold. But it is a period cost as it not associated with production.
10	Machinery Depreciation- Straight line	Machine depreciation is fixed cost as it will be incurred even if the machine is not working. However, it is product cost because machine is used in production.

Conclusion

Conclusion:-

Hence, product costs are those which directly take part in production and period costs are those which are to be incurred irrespective of the fact that the production is taking place or not.

To determine

To determine:-

Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Manufacturing costs per drum set is $180 per drum set.

Explanation of Solution

Explanation:-

Manufacturing costs essentially includes direct materials costs, direct labour costs and manufacturing overheads like indirect materials, indirect labour etc.

Now, here manufacturing costs per unit can be calculated by dividing the total manufacturing costs by the total number of units produced.

Plastic for casing	17000
Wages of assembly workers	82000
Property taxes on factory	5000
Drum stands purchased	26000
Machinery depreciation	40000
Annual flat fee for factory maintenance service	10000
Total manufacturing cost	180000

$M a n u f a c t u r i n g c o s t p e r u n i t = 180000 \div 1000 u n i t s$

$= $ 180 p e r d r u m s e t$

Conclusion

Conclusion:-

Hence, manufacturing costs include direct material and labour and overheads essential for producing a finished product.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of plastic for casings is $20, 400. And the per unit cost of plastic for casings is $17.

Explanation of Solution

Explanation:-

In the current year total cost of plastic for casings is $17000 for 1000 drum sets. Therefore, per unit cost of plastic for casing is:-

$= 17000 \div 1000$

$= $ 17 p e r u n i t$

Since, plastic for casings is a variable cost; it will increase with the increase in production. But, per unit cost will remain same.

Now, total cost of plastic for casings assuming 1200 drum sets are produced is as follows:-

$N u m b e r o f u n i t s p r o d u c e d \times P e r u n i t c o s t o f p l a s t i c f o r c a s i n g s$

$= 1200 \times 17$

$= $ 20, 400$

Conclusion

Conclusion:-

Hence, per unit cost of plastic for casing will remain same at $17, but the total cost of plastic for casings would increase to $20, 400 with production of 1200 drum sets.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of property taxes would be $5, 000. And the per unit cost of property taxes would be $4.1667.

Explanation of Solution

Explanation:-

In the current year total cost of property taxes is $5000 for 1000 drum sets..

Since, property taxes on factory are a fixed cost; it will not increase with the increase in production. However, per unit cost will decrease with the increase in production.

Now, per unit cost of property taxes assuming 1200 drum sets are produced is as follows:-

$= T o t a l p r o p e r t y t a x e s \div N u m b e r o f d r u m s e t s p r o d u c e d$

$= 5000 \div 1200$

$= $ 4.1667$

Conclusion

Conclusion:-

Hence, per unit cost of property taxes will decrease to $4.1667, but the total cost of property taxes would remain same at $5000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 18, Problem 1APSA

To determine

Introduction:-

There are broadly two costs associated during production and selling of the final product. They are product costs and period costs. Product costs are the costs that are directly associated with the production of a product, whereas period costs are the costs that are not included in the production process like selling expense, administrative expense etc.

To determine:-

Here, in the given problem, we are required to classify each of the costs given to us as either variable or fixed and either product or fixed costs for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Following table will classify each cost as either fixed or variable and then product or period:-

	Costs	Variable or Fixed		Product or period
		Variable	Fixed	Product	Period
1	Plastic for casing	$17000		$17000
2	Wages of Assembly workers	$82000		$82000
3	Property taxes on factory		$5000		$5000
4	Accounting Staff salaries		$35000		$35000
5	Drum stands (1000 stand purchased)	$26000		$26000
6	Rent cost of equipment for sales staff		$10000		$10000
7	Upper management salaries		$125000		$125000
8	Annual flat fee for factory maintenance service		$10000	$10000
9	Sales commission ($15 per unit)	$15000			$15000
10	Machinery Depreciation- Straight line		$40000	$40000

Explanation of Solution

Explanation:-

Products costs are sometimes bifurcated into variable costs or fixed costs and mainly include Direct and indirect raw material costs, direct and indirect labour costs and factory overheads or manufacturing overheads. On the other hand period costs are further bifurcated into selling expenses and administrative expenses.

Following table will provide justification for segregating costs into fixed or variable and period or product:-

1	Plastic for casing	Plastic for casing is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
2	Wages of Assembly workers	Wages of assembly workers is a variable cost as they will change as per the production levels. Also it is a product cost as this cost is attributed to production.
3	Property taxes on factory	Property taxes on factory are a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
4	Accounting Staff salaries	Accounting staff salaries is a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
5	Drum stands (1000 stand purchased)	Purchase of drums stands is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
6	Rent cost of equipment for sales staff	It is a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
7	Upper management salaries	Upper management salaries are a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
8	Annual flat fee for factory maintenance service	It is a fixed cost as it will be incurred irrespective of whether production takes place or not. However it is a product cost as it is directly associated with production.
9	Sales commission ($15 per unit)	Sales commission is a variable cost as it will depend on the number of units sold. But it is a period cost as it not associated with production.
10	Machinery Depreciation- Straight line	Machine depreciation is fixed cost as it will be incurred even if the machine is not working. However, it is product cost because machine is used in production.

Conclusion

Conclusion:-

Hence, product costs are those which directly take part in production and period costs are those which are to be incurred irrespective of the fact that the production is taking place or not.

To determine

To determine:-

Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Manufacturing costs per drum set is $180 per drum set.

Explanation of Solution

Explanation:-

Manufacturing costs essentially includes direct materials costs, direct labour costs and manufacturing overheads like indirect materials, indirect labour etc.

Now, here manufacturing costs per unit can be calculated by dividing the total manufacturing costs by the total number of units produced.

Plastic for casing	17000
Wages of assembly workers	82000
Property taxes on factory	5000
Drum stands purchased	26000
Machinery depreciation	40000
Annual flat fee for factory maintenance service	10000
Total manufacturing cost	180000

$M a n u f a c t u r i n g c o s t p e r u n i t = 180000 \div 1000 u n i t s$

$= $ 180 p e r d r u m s e t$

Conclusion

Conclusion:-

Hence, manufacturing costs include direct material and labour and overheads essential for producing a finished product.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of plastic for casings is $20, 400. And the per unit cost of plastic for casings is $17.

Explanation of Solution

Explanation:-

In the current year total cost of plastic for casings is $17000 for 1000 drum sets. Therefore, per unit cost of plastic for casing is:-

$= 17000 \div 1000$

$= $ 17 p e r u n i t$

Since, plastic for casings is a variable cost; it will increase with the increase in production. But, per unit cost will remain same.

Now, total cost of plastic for casings assuming 1200 drum sets are produced is as follows:-

$N u m b e r o f u n i t s p r o d u c e d \times P e r u n i t c o s t o f p l a s t i c f o r c a s i n g s$

$= 1200 \times 17$

$= $ 20, 400$

Conclusion

Conclusion:-

Hence, per unit cost of plastic for casing will remain same at $17, but the total cost of plastic for casings would increase to $20, 400 with production of 1200 drum sets.

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of property taxes would be $5, 000. And the per unit cost of property taxes would be $4.1667.

Explanation of Solution

Explanation:-

In the current year total cost of property taxes is $5000 for 1000 drum sets..

Since, property taxes on factory are a fixed cost; it will not increase with the increase in production. However, per unit cost will decrease with the increase in production.

Now, per unit cost of property taxes assuming 1200 drum sets are produced is as follows:-

$= T o t a l p r o p e r t y t a x e s \div N u m b e r o f d r u m s e t s p r o d u c e d$

$= 5000 \div 1200$

$= $ 4.1667$

Conclusion

Conclusion:-

Hence, per unit cost of property taxes will decrease to $4.1667, but the total cost of property taxes would remain same at $5000.

Answer 6

Chapter 18, Problem 1APSA

To determine

Introduction:-

There are broadly two costs associated during production and selling of the final product. They are product costs and period costs. Product costs are the costs that are directly associated with the production of a product, whereas period costs are the costs that are not included in the production process like selling expense, administrative expense etc.

To determine:-

Here, in the given problem, we are required to classify each of the costs given to us as either variable or fixed and either product or fixed costs for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Following table will classify each cost as either fixed or variable and then product or period:-

	Costs	Variable or Fixed		Product or period
		Variable	Fixed	Product	Period
1	Plastic for casing	$17000		$17000
2	Wages of Assembly workers	$82000		$82000
3	Property taxes on factory		$5000		$5000
4	Accounting Staff salaries		$35000		$35000
5	Drum stands (1000 stand purchased)	$26000		$26000
6	Rent cost of equipment for sales staff		$10000		$10000
7	Upper management salaries		$125000		$125000
8	Annual flat fee for factory maintenance service		$10000	$10000
9	Sales commission ($15 per unit)	$15000			$15000
10	Machinery Depreciation- Straight line		$40000	$40000

Explanation of Solution

Explanation:-

Products costs are sometimes bifurcated into variable costs or fixed costs and mainly include Direct and indirect raw material costs, direct and indirect labour costs and factory overheads or manufacturing overheads. On the other hand period costs are further bifurcated into selling expenses and administrative expenses.

Following table will provide justification for segregating costs into fixed or variable and period or product:-

1	Plastic for casing	Plastic for casing is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
2	Wages of Assembly workers	Wages of assembly workers is a variable cost as they will change as per the production levels. Also it is a product cost as this cost is attributed to production.
3	Property taxes on factory	Property taxes on factory are a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
4	Accounting Staff salaries	Accounting staff salaries is a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
5	Drum stands (1000 stand purchased)	Purchase of drums stands is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
6	Rent cost of equipment for sales staff	It is a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
7	Upper management salaries	Upper management salaries are a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
8	Annual flat fee for factory maintenance service	It is a fixed cost as it will be incurred irrespective of whether production takes place or not. However it is a product cost as it is directly associated with production.
9	Sales commission ($15 per unit)	Sales commission is a variable cost as it will depend on the number of units sold. But it is a period cost as it not associated with production.
10	Machinery Depreciation- Straight line	Machine depreciation is fixed cost as it will be incurred even if the machine is not working. However, it is product cost because machine is used in production.

Conclusion

Conclusion:-

Hence, product costs are those which directly take part in production and period costs are those which are to be incurred irrespective of the fact that the production is taking place or not.

Answer 7

Chapter 18, Problem 1APSA

To determine

Introduction:-

There are broadly two costs associated during production and selling of the final product. They are product costs and period costs. Product costs are the costs that are directly associated with the production of a product, whereas period costs are the costs that are not included in the production process like selling expense, administrative expense etc.

To determine:-

Here, in the given problem, we are required to classify each of the costs given to us as either variable or fixed and either product or fixed costs for True Beat.

Answer 8

Expert Solution

Answer to Problem 1APSA

Solution:-

Following table will classify each cost as either fixed or variable and then product or period:-

	Costs	Variable or Fixed		Product or period
		Variable	Fixed	Product	Period
1	Plastic for casing	$17000		$17000
2	Wages of Assembly workers	$82000		$82000
3	Property taxes on factory		$5000		$5000
4	Accounting Staff salaries		$35000		$35000
5	Drum stands (1000 stand purchased)	$26000		$26000
6	Rent cost of equipment for sales staff		$10000		$10000
7	Upper management salaries		$125000		$125000
8	Annual flat fee for factory maintenance service		$10000	$10000
9	Sales commission ($15 per unit)	$15000			$15000
10	Machinery Depreciation- Straight line		$40000	$40000

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Explanation:-

Products costs are sometimes bifurcated into variable costs or fixed costs and mainly include Direct and indirect raw material costs, direct and indirect labour costs and factory overheads or manufacturing overheads. On the other hand period costs are further bifurcated into selling expenses and administrative expenses.

Following table will provide justification for segregating costs into fixed or variable and period or product:-

1	Plastic for casing	Plastic for casing is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
2	Wages of Assembly workers	Wages of assembly workers is a variable cost as they will change as per the production levels. Also it is a product cost as this cost is attributed to production.
3	Property taxes on factory	Property taxes on factory are a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
4	Accounting Staff salaries	Accounting staff salaries is a fixed cost as they will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
5	Drum stands (1000 stand purchased)	Purchase of drums stands is a variable cost as its requirement will change as per the production. Also it is a product cost as it is associated with production.
6	Rent cost of equipment for sales staff	It is a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
7	Upper management salaries	Upper management salaries are a fixed cost as it will be incurred irrespective of the fact whether production takes place or not. Further it is period cost as it is not directly associated in production.
8	Annual flat fee for factory maintenance service	It is a fixed cost as it will be incurred irrespective of whether production takes place or not. However it is a product cost as it is directly associated with production.
9	Sales commission ($15 per unit)	Sales commission is a variable cost as it will depend on the number of units sold. But it is a period cost as it not associated with production.
10	Machinery Depreciation- Straight line	Machine depreciation is fixed cost as it will be incurred even if the machine is not working. However, it is product cost because machine is used in production.

Answer 13

Conclusion

Conclusion:-

Hence, product costs are those which directly take part in production and period costs are those which are to be incurred irrespective of the fact that the production is taking place or not.

Answer 14

To determine

To determine:-

Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

Expert Solution

Answer to Problem 1APSA

Solution:-

Manufacturing costs per drum set is $180 per drum set.

Explanation of Solution

Explanation:-

Manufacturing costs essentially includes direct materials costs, direct labour costs and manufacturing overheads like indirect materials, indirect labour etc.

Now, here manufacturing costs per unit can be calculated by dividing the total manufacturing costs by the total number of units produced.

Plastic for casing	17000
Wages of assembly workers	82000
Property taxes on factory	5000
Drum stands purchased	26000
Machinery depreciation	40000
Annual flat fee for factory maintenance service	10000
Total manufacturing cost	180000

$M a n u f a c t u r i n g c o s t p e r u n i t = 180000 \div 1000 u n i t s$

$= $ 180 p e r d r u m s e t$

Conclusion

Conclusion:-

Hence, manufacturing costs include direct material and labour and overheads essential for producing a finished product.

Answer 15

To determine

To determine:-

Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

Answer 16

Expert Solution

Answer to Problem 1APSA

Solution:-

Manufacturing costs per drum set is $180 per drum set.

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

Explanation:-

Manufacturing costs essentially includes direct materials costs, direct labour costs and manufacturing overheads like indirect materials, indirect labour etc.

Now, here manufacturing costs per unit can be calculated by dividing the total manufacturing costs by the total number of units produced.

Plastic for casing	17000
Wages of assembly workers	82000
Property taxes on factory	5000
Drum stands purchased	26000
Machinery depreciation	40000
Annual flat fee for factory maintenance service	10000
Total manufacturing cost	180000

$M a n u f a c t u r i n g c o s t p e r u n i t = 180000 \div 1000 u n i t s$

$= $ 180 p e r d r u m s e t$

Answer 21

Conclusion

Conclusion:-

Hence, manufacturing costs include direct material and labour and overheads essential for producing a finished product.

Answer 22

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of plastic for casings is $20, 400. And the per unit cost of plastic for casings is $17.

Explanation of Solution

Explanation:-

In the current year total cost of plastic for casings is $17000 for 1000 drum sets. Therefore, per unit cost of plastic for casing is:-

$= 17000 \div 1000$

$= $ 17 p e r u n i t$

Since, plastic for casings is a variable cost; it will increase with the increase in production. But, per unit cost will remain same.

Now, total cost of plastic for casings assuming 1200 drum sets are produced is as follows:-

$N u m b e r o f u n i t s p r o d u c e d \times P e r u n i t c o s t o f p l a s t i c f o r c a s i n g s$

$= 1200 \times 17$

$= $ 20, 400$

Conclusion

Conclusion:-

Hence, per unit cost of plastic for casing will remain same at $17, but the total cost of plastic for casings would increase to $20, 400 with production of 1200 drum sets.

Answer 23

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

Answer 24

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of plastic for casings is $20, 400. And the per unit cost of plastic for casings is $17.

Answer 25

Expert Solution

Answer 26

Expert Solution

Answer 27

Expert Solution

Answer 28

Explanation of Solution

Explanation:-

In the current year total cost of plastic for casings is $17000 for 1000 drum sets. Therefore, per unit cost of plastic for casing is:-

$= 17000 \div 1000$

$= $ 17 p e r u n i t$

Since, plastic for casings is a variable cost; it will increase with the increase in production. But, per unit cost will remain same.

Now, total cost of plastic for casings assuming 1200 drum sets are produced is as follows:-

$N u m b e r o f u n i t s p r o d u c e d \times P e r u n i t c o s t o f p l a s t i c f o r c a s i n g s$

$= 1200 \times 17$

$= $ 20, 400$

Answer 29

Conclusion

Conclusion:-

Hence, per unit cost of plastic for casing will remain same at $17, but the total cost of plastic for casings would increase to $20, 400 with production of 1200 drum sets.

Answer 30

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of property taxes would be $5, 000. And the per unit cost of property taxes would be $4.1667.

Explanation of Solution

Explanation:-

In the current year total cost of property taxes is $5000 for 1000 drum sets..

Since, property taxes on factory are a fixed cost; it will not increase with the increase in production. However, per unit cost will decrease with the increase in production.

Now, per unit cost of property taxes assuming 1200 drum sets are produced is as follows:-

$= T o t a l p r o p e r t y t a x e s \div N u m b e r o f d r u m s e t s p r o d u c e d$

$= 5000 \div 1200$

$= $ 4.1667$

Conclusion

Conclusion:-

Hence, per unit cost of property taxes will decrease to $4.1667, but the total cost of property taxes would remain same at $5000.

Answer 31

To determine

To determine:-

Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.

Answer 32

Expert Solution

Answer to Problem 1APSA

Solution:-

The total cost of property taxes would be $5, 000. And the per unit cost of property taxes would be $4.1667.

Answer 33

Expert Solution

Answer 34

Expert Solution

Answer 35

Expert Solution

Answer 36

Explanation of Solution

Explanation:-

In the current year total cost of property taxes is $5000 for 1000 drum sets..

Since, property taxes on factory are a fixed cost; it will not increase with the increase in production. However, per unit cost will decrease with the increase in production.

Now, per unit cost of property taxes assuming 1200 drum sets are produced is as follows:-

$= T o t a l p r o p e r t y t a x e s \div N u m b e r o f d r u m s e t s p r o d u c e d$

$= 5000 \div 1200$

$= $ 4.1667$

Answer 37

Conclusion

Conclusion:-

Hence, per unit cost of property taxes will decrease to $4.1667, but the total cost of property taxes would remain same at $5000.

Answer 38

Ch. 18 - Prob. 1DQ Ch. 18 - Prob. 2DQ Ch. 18 - Prob. 3DQ Ch. 18 - Prob. 4DQ Ch. 18 - Prob. 5DQ Ch. 18 - Prob. 6DQ Ch. 18 - Prob. 7DQ Ch. 18 - Prob. 8DQ Ch. 18 - Prob. 9DQ Ch. 18 - Prob. 10DQ

Answer to Problem 1APSA

Explanation of Solution

To determine:- Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

Answer to Problem 1APSA

Explanation of Solution

To determine:- Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

Answer to Problem 1APSA

Explanation of Solution

To determine:- Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.

Answer to Problem 1APSA

Explanation of Solution

Want to see more full solutions like this?

Chapter 18 Solutions

To determine:-

Now, we are required to ascertain the manufacturing cost per drum set for True Beat.

To determine:-

Now, we are required to ascertain the total cost and per unit cost of plastic for casings for the next year when it is assumed that 1200 drum sets are produced.

To determine:-

Now, we are required to ascertain the total cost and per unit cost of property taxes for the next year when it is assumed that 1200 drum sets are produced.