P3.33 LO 3.7 Cost behaviour; engineered cost; committed and discretionary costs: manufacturer HappyDaze T-shirts manufactures and prints
Question:
P3.33 LO 3.7 Cost behaviour; engineered cost; committed and discretionary costs: manufacturer HappyDaze T-shirts manufactures and prints customised designs on T-shirts. Below is a list of some of their major costs.
(a) cost of daily radio advertising on the local community radio station
(b) cost of the fabric used to make the T-shirts
(c) cost of the ink used in the designs
(d) salary of the managing director
(e) wages of the production employees who sew and print the T-shirts
(f) cost of movie tickets provided for the employee of the month award each month (g) depreciation of the sewing machines, calculated on a units of production basis (h) cost of electricity used in the factory building (i) rent of the building (j) wages of the staff who package the T-shirts (k) cost of sewing machine maintenance (I) cost of the new advertising sign at the front of the factory (m) cost of the company car used by the managing director. Required For each cost: 1. Indicate whether it is fixed or variable. 2. If the cost is variable, indicate whether it is an engineered cost. Explain why. 3. If the cost is fixed, indicate whether it is committed or discretionary. Explain why.
Step by Step Answer:
Management Accounting Information For Creating And Managing Value
ISBN: 9781743767603
9th Edition
Authors: Kim Langfield Smith, David Smith, Paul Andon, Ronald W. Hilton