Cost behavior; 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.

(l) 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.