Question
Heritage Company manufactures a beautiful bookcase that enjoys widespread popularity. The company has a backlog of orders that is large enough to keep production going
Heritage Company manufactures a beautiful bookcase that enjoys widespread popularity. The company has a backlog of orders that is large enough to keep production going indefinitely at the plant's full capacity of 3,900 bookcases per year. Annual cost data at full capacity follow:
Direct materials used (wood and glass) | $ | 432,000 |
Administrative office salaries | $ | 113,000 |
Factory supervision | $ | 66,000 |
Sales commissions | $ | 55,000 |
Depreciation, factory building | $ | 104,000 |
Depreciation, administrative office equipment | $ | 3,000 |
Indirect materials, factory | $ | 17,000 |
Factory labor (cutting and assembly) | $ | 86,000 |
Advertising | $ | 97,000 |
Insurance, factory | $ | 5,000 |
Administrative office supplies (billing) | $ | 4,000 |
Property taxes, factory | $ | 22,000 |
Utilities, factory | $ | 46,000 |
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1. | Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, as either variable or fixed with respect to the number of units produced and sold; and second, as either a selling and administrative cost or a product cost. (If the item is a product cost, it should also be classified as either direct or indirect.)
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