Mary Mickell, Inc, acquired its factory building about ten years ago and has been leasing an

annex in the rear of the building, It has received a rental income $30,000 annually. The

lease is about to expire and Math/ Mickell is considering not renewing the lease, but

using the space for production of a new product. Materials used in the production of the

new product will be $80 per unit. The company will rent, for $500 per month, a small

warehouse to store finished products. The company will rent equipment to use in the

manufacturing process for $4,000 per month. Workers will be hired for production at $60

per unit. The annex will continue to be depreciated using straight-line depreciation at

$8,000 per year. A supervisor will be hired at $1,500 per month, Advertising for the new

product Will total $50,000 per year. Casts of shipping the new product to customers will

be $9 per unit and electricity to run the machinery will be $1.20 per unit.

Using the f lowing headings, identify the different costs associated with the new product

decision as what type of cost they represent, It is possible for a particular cost to be

identified more than one heading. Address ALL of the costs listed above.

variable cost fixed cost prime cost version cost direct cost direct labor manufacturing overhead period cost opportunity cost sunk cost