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Acc 503 Enterprises manufactures custom bicycles, mostly for highly competitive cyclist. Salespersons are paid a straight percentage commission on sales. Raw materials generally are well
Acc 503 Enterprises manufactures custom bicycles, mostly for highly competitive cyclist. Salespersons are paid a straight percentage commission on sales. Raw materials generally are well stocked and orders are made once a month based on replenishing needs. Cutting, machining, and assembly are all done manually and include the main components as well as other items (e.g., paint, special varnish). Each bike is inspected and tested thoroughly before pick up or delivery. A production manager oversees the assembly operation and also performs the quality control testing. Administrative personnel handle all non-production-related tasks. Within the framework of the previous example, indicate if the cost is a period or product cost, fixed or variable, and if a product cost, direct materials, direct labor, or manufacturing overhead. Variable costs may be related to factory metrics (e.g., machine or direct labor hours). They may also be related to sales metrics (e.g., sales dollars). a. Welding supplies. b. Salespersons' bonuses (lump sum divided equally among salespersons, the "lump" is based on exceeding profit targets for 503). c. Quality control testing. d. Business interruption insurance premium (in the event of fire, flood, or some other "natural" act, this policy will pay 70% of 503 's average business day's income from the prior year for six calendar months). e. Electrical power to run machinery in the plant
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