Hand-Made Furniture Company manufactures sofas for distribution to several major retail chains. The following costs are incurred in the production and sale of sofas:
a. Wood for framing the sofas
b. Salary of production vice president
c. Rent on experimental equipment, $50 for every sofa produced
d. Rental costs of warehouse, $30,000 per month
e. Insurance premiums on property, plant, and equipment, $25,000 per year plus $25 per $25,000 of insured value over $16,000,00
f. consulting fee of $120,000 paid to efficiency specialist
g. Salesperson’s salary, $80,000 plus 4% of the selling price of each sofa sold
h. Janitorial supplies, $25 for each sofa produced
i. Employer’s FICA taxes on controller’s salary of $180,000
j. Fabric for sofa coverings
k. Hourly wages of sewing machine operators
l. Sewing supplies
m. Salary of designers
n. Foam rubber for cushion fillings
o. Electricity costs of $0,13 per kilowatt-hour
p. springs
q. Property taxes on property, plant, and equipment
r. Straight-line depreciation on factory equipment
s. Cartons used to ship sofas
t. legal fees paid to attorneys in defense of the company in a patent infringement suit, $25,000 plus $160 per hour
Instructions
Classify the preceding costs as either fixed, variable, or mixed. Use the following tabular heading and place an “X” in the appropriate column. Identify each cost by letter in the cost column.
Cost Fixed Cost Variable Cost Mixed Cost