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Listed below are costs found in various organizations. Required: For each cost item, indicate whether it would be variable or fixed with respect to the
Listed below are costs found in various organizations. Required: For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a direct cost or an indirect cost with respect to units of product. Three sample answers are provided for illustration. Cost Item Example: Direct labor Example: Executive salaries Variable or Fixed Selling Cost Administrative Cost Manufacturing Manufacturing (Product) Cost (Product) Cost Variable Fixed Direct Yes Yes Indirect Example: Factory rent 1. Property taxes, factory Fixed Yes Fixed 2. Boxes used for packaging detergent produced by the company. Variable 3. Salespersons' commissions. 4. Supervisor's salary, factory. 5. Depreciation, executive autos. 6. Wages of workers assembling computers. 7. Insurance, finished goods warehouses. Fixed Fixed Yes Variable Variable Fixed 8. Lubricants for production equipment. 9. Advertising costs. 10. Microchips used in producing calculators. Variable Variable Variable 11. Shipping costs on merchandise sold. Variable 12. Magazine subscriptions, factory lunchroom. Variable 13. Thread in a garment factory. Variable 14. Executive life insurance. Fixed 15. Ink used in textbook production. Variable 16. Fringe benefits, materials handling workers. Variable 17. Yarn used in sweater production. Variable 18. Wages of receptionist, executive offices. Variable
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