10 Marks Question 2 Several years ago, Wallace Company purchased a small building adjacent manufacturing plant in order to have room for expansion when needed. Since the co djacent to i the company company had no immediate need for the extra space, it rented out the building to another comp renewing the lease, Wallace Company has decided to use the building itself to manufacture for a rental revenue of $35,000 per year. The renter's lease will expire soon, and rather th a new product. Direct materials cost for the new product will total $50 per unit. It will be necessary to hir a supervisor to oversee production. His salary will be S3,000 per month. Workers will be hired to manufacture the new product, with direct labour cost amounting to S22 per unit Manufacturing operations will occupy all of the building space, so it will be necessary to rent space to a warehouse nearby to store finished units of product. The rental cost will be S1, per month. In addition, the company will need to rent equipment for use in producing the new product: the rental cost will be S2,200 per month. The company will continge to depreciate the building on a straight line basis, as in part years. Depreciation on the bu iation on the building is $7,000 per year Advertising costs for the new product will total S28,000 per year. Costs of shipping the a product to customers will be $7 per unit. Electrical costs of operating machines will be per unit. le To have funds to purchase materials, meet payrolls, and so forth, the company will sl will have b nv, liquidate some temporary investments. These investments are yielding a retura per year gai have. Required: Complete the chart below by placing an "" under each heading that helps to There can be "X's" placed under more than one heading for a single cost eplaced to ideat cost involved. t helps to identity the & co be a sunk cost, an overhead cost and a product cost; there wou each of these headings opposite the cost. cost, e-E., a cost mis ld re would be an X" placed