Problem 1

The following table shows various costs incurred by a manufacturing company, identify next to each cost whether it is fixed or variable:

Cost

Variable

Fixed

Depreciation of executive jet

Cost of shipping finished goods to customers

Wood used in manufacturing furniture

Sales managers salary

Electricity used in manufacturing furniture

Packing supplies for shipping products

Sand used in manufacturing concrete

Supervisors salary

Advertising costs

Executives life insurance

Problem 2

Lets say that XYZ Company manufactures automobiles and it costs the company $250 to make one steering wheel.

In order to run its business, the company incurs $550,000 in rental fees for its factory space.

In the table below, calculate the companys costs depending on its level of production and the information provided to you above.

Number of Automobiles Produced

Variable Cost per Steering Wheel

Total Variable Cost

Total Fixed Cost

1

500

1000

1500