Chapter 4, Problem 1E

Classify each of the following items of factory overhead as either a fixed or a variable cost. (Include any costs that you consider to be semivariable within the variable category. Remember that variable costs change in total as the volume of production changes.)

1. a. Indirect labor
2. b. Indirect materials
3. c. Insurance on building
4. d. Overtime premium pay
5. e. Depreciation of building (straight-line method)
6. f. Polishing compounds
7. g. Depreciation of machinery (units-of-production method)
8. h. Employer’s payroll taxes
9. i. Property taxes
10. j. Machine lubricants
11. k. Employees’ hospital insurance (paid by employer)
12. l. Labor for machine repairs
13. m. Vacation pay
14. n. Janitor’s wages
15. o. Rent
16. p. Small tools
17. q. Plant manager’s salary
18. r. Factory electricity
19. s. Product inspector’s wages