Classic Cabinets has a factory that produces custom kitchen cabinets. It has multiple product lines.
Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs.
Salaries-office & administrative	$520,000
Salaries for factory personal	$220,000
Office Rent	$125,000
Factory Rent	$20,000
Utilities and Misc office expenses(based on units sold)	$20,000
Travel(based on units sold)	$24,000
Insurance - office	$12,000
Depreciation - office equipment	$40,000
Depreciation for factory equipment	$70,000
Advertising	$20,000
Sales commissions(based on units sold)	$45,000
Factory Property taxes	$10,000
Maintenance for factory equipment	$80,000
Direct labor hours	16,000
Material cost (wood and other)	$1,200
Custom kitchen average labor hours	20	hours
Labor cost per hour	$10
Markup	65%
Sold unit per year	800	units
Total cost /unit	$1,400
Selling price /unit	$2,310
Income Statement
Sales	$1,848,000
What are the variable costs for this product line? What are the fixed costs? I would recommend that you show a schedule for each area on a yearly basis. For the variable costs, also, show them on a per unit (800 units) How does a company identify each type of cost? Can a cost classification be changed over time? If yes, explain how. If no, explain why?