Answer Happy

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. Cost Item Example Direct labor. Example Executive salaries Example Factory rent 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 Executive life insurance. Variable or Fixed Variable Fixed Fixed Selling Cost Administrative Cost Yes Manufacturing Manufacturing (Product) Cost (Product) Cost InDirect Direct Yes Yes

Cost Item Example Direct labor Example Executive salaries Example Factory rent 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. Executive life insurance. 15. Ink used in textbook production 16 Fringe benefits, materials handling workers 17 Yarn used in sweater production 18 Wages of receptionist, executive offices Fixed Variable Fixed Fixed Selling Cost Cost Yes (Product) Cost (Product) Cos InDirect Direct Yes Yes