Question

For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a direct cost or an indirect cost with respect to units of product.
1. Property taxes, factory.
2. Boxes used for packaging detergent produced by the company.
3. Salespersons' commissions.
4. Supervisor's salary, factory.
5. Depreciation, executive autos.
6. Wages of workers assembling computers.
7. Insurance, finished goods warehouses.
8. Lubricants for production equipment.
9. Advertising costs.
10. Microchips used in producing calculators.
11. Shipping costs on merchandise sold.
12. Magazine subscriptions, factory lunchroom.
13. Thread in a garment factory.
14. Billing costs.
15. Executive life insurance.
16. Ink used in textbook production.
17. Fringe benefits, assembly-line workers.
18. Yarn used in sweater production.
19. Wages of receptionist, executive offices.

Answer 1

Answer:

Part 1

Variable or Fixed

a. Variable Costs

Boxes used for packaging detergent produced by the company.

Wages of workers assembling computers.

Salespersons' commissions.

Microchips used in producing calculators.

Shipping costs on merchandise sold.

Thread in a garment factory.

Fringe benefits, assembly-line workers

Yarn used in sweater production

b. Fixed Costs

Property taxes, factory.

Supervisor's salary, factory.

Depreciation, executive autos.

Insurance, finished goods warehouses.

Lubricants for production equipment.

Advertising costs.

Magazine subscriptions, factory lunchroom.

Billing costs.

Executive life insurance.

Ink used in textbook production.

Wages of receptionist, executive offices.

Part 2

Selling or Administrative or Manufacturing Cost

a. Selling Cost

Salespersons' commissions.

Advertising costs.

Shipping costs on merchandise sold.

b. Administrative Cost

Depreciation, executive autos.

Billing costs.

Executive life insurance.

Wages of receptionist, executive offices.

c. Manufacturing Cost

Property taxes, factory.

Boxes used for packaging detergent produced by the company.

Supervisor's salary, factory.

Wages of workers assembling computers.

Insurance, finished goods warehouses.

Lubricants for production equipment.

Microchips used in producing calculators.

Magazine subscriptions, factory lunchroom.

Thread in a garment factory.

Ink used in textbook production.

Fringe benefits, assembly-line workers

Yarn used in sweater production

Part 3

Direct or Indirect Cost

a. Direct Cost

Boxes used for packaging detergent produced by the company.

Wages of workers assembling computers.

Microchips used in producing calculators.

Thread in a garment factory.

Yarn used in sweater production

b. Indirect Cost

Property taxes, factory.

Supervisor's salary, factory.

Insurance, finished goods warehouses.

Lubricants for production equipment.

Magazine subscriptions, factory lunchroom.

Ink used in textbook production.

Fringe benefits, assembly-line workers

Explanation:

Variable Costs vary with the number of units sold or produced, whilst fixed cost remain constant.

Manufacturing Costs comprises of all costs related to manufacture of the products.

Direct Cost are those that can be easily traced on the product being manufactured, whilst indirect costs are difficult to trace to the product being manufactured.