Question

The following is a list of various costs of producing T-shirts. Classify each cost as either a variable, fixed, or mixed cost for units produced and sold.
a. Ink used for screen printing Variable
b. Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used Mixed
c. Thread Variable
d. Electricity costs of $0.038 per kilowatt-hour Variable
e. Janitorial costs of $4,000 per month Fixed
f. Advertising costs of $12,000 per month
g. Accounting salaries
h. Color dyes for producing different colors of T-shirts Variable
i. Salary of the production supervisor
j. Straight-line depreciation on sewing machines Fixed
k. Salaries of internal pattern designers
l. Hourly wages of sewing machine operators Variable
m. Property taxes on factory, building, and equipment Fixed
n. Cotton and polyester cloth
o. Maintenance costs with sewing machine company (the cost is $2,000 per year plus $0.001 for each machine hour of use.) Mixed

Answer 1

Solution :

a. Ink used for screen printing   ---  Variable

b. Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used   ---   Mixed

c. Thread  ---   Variable

d. Electricity costs of $0.038 per kilowatt-hour  ---   Variable

e. Janitorial costs of $4,000 per month   ----  Fixed

f. Advertising costs of $12,000 per month  ----  FIXED

g. Accounting salaries   ---    FIXED

h. Color dyes for producing different colors of T-shirts   -----  Variable

i. Salary of the production supervisor   ----   FIXED

j. Straight-line depreciation on sewing machines    -----     Fixed

k. Salaries of internal pattern designers   -----   FIXED

l. Hourly wages of sewing machine operators    ------    Variable

m. Property taxes on factory, building, and equipment  -----    Fixed

n. Cotton and polyester cloth   ----    VARIABLE

o. Maintenance costs with sewing machine company (the cost is $2,000 per year plus $0.001 for each machine hour of use.)   ---- Mixed