Maxco Corp is a manufacturing company for jeans. They usually produce 70,000 jeans

in one month with the detailed fees below:

a. Button costs.

b. Cost to rent warehouse space for complete jeans. The rental contract lasts for 2

year at a cost of $ 5,000 per year.

c. Summer internship salary.

d. Lawn mowing costs. Contracts with local pruning companies run month after month.

e. Advertise in national magazines for teenage girls.

f. Electricity for running a sewing machine.

g. Spare oil and needles for sewing machines.

h. Quality training for employees - usually provided for four hours at a time, each

six months.

i. Food and drinks for a company picnic on July 4th.

j. The use of gas to heat the plant during winter.

For the following year, they plan to have 100,000 jeans per month with the same total fixed costs and variable costs per unit. As a management accountant you are asked to:

a. The following classification of costs for a jeans manufacturing company is a variable cost,

committed fixed cost, or discretionary fixed cost! Explain your answer! (10 points)

b. Why do they ask you to classify their costs? How important is that?

that? Explain your answer based on cost behavior! (10 pts)