Chapter 01 Homework Help Save&Exit Subm Check my work 2 Exercise 1-14 Cost Classification [LO1-2, LO1-3, LO1-4, LO1-5 Wollogong Group Ltd of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a smail annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product Direct materials cost for the new product will total $80 per unit. To have a place to store its finished goods, the company will rent small warehouse for $500 per month In addition, the company must rent equipment for $4,000 per month to produce the new product. Direct laborers will be hired and paid $60 per unit to manufacture the new product. As in prior years, the space in the annex terenceswll continue to be depreciated at $8,000 per year The annual advertising cost for the new product will be $50,000 A supervisor will be hired and paid $3.500 per month to oversee production. Electricity for operating machines will be $1.20 per unit. The cost of shipping the new product to customers will be $9 per To provide funds to purchase materials, meet payrols, and so forth, the company will have to Squidate some temporary investments These investments are presently yielding a return of $3,000 per year Required: Using the table shown below, describe each of the costs associated with the new product decision in four ways. In terms of cost clessifications for predicting cost behavior (eolumn tindicate whether the cost is fxed or wariable, Win respect to cost classications for manufacturers coumn 2if the nern is a manufachrng cost rdcate whether t i, dect materiais, drect labot or men actunog overhead. t it is a nonmanufacturing cost, then select "none" as your answer. Wieh respect to cost classfications for prepaning financial statements (column 3), indicabe whether she item is a product cost or period cost. Finally, in terms of cost classfications for decision making icolumn 4j, idkentry any items that are sunk costs or opportunity costs. If you identify an item as an opportunity cost. then select none" as your answer in columns 1-3 ?Prev 2ot 5111 Next> 5 8