The following information applies to the questions displayed below.) Listed here are the total costs associated with the production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $516 each. Costs 1. Plastic for casing-$19.000 2. Wages of assembly workers--$90,000 3. Property taxes on factory-$7,000 4. Accounting staff salarles-$33.000 5. Drum stands (1.000 stands purchased)-$35,000 6. Rent cost of equipment for sales staff-$36.000 7. Upper management salaries--$170,000 8. Annual flat fee for factory maintenance service-$16,000 9. Sales commissions-$25 per unit 10. Machinery depreciation, straight-line-$42.000 9/16/2020 Assignment Print View 9. Award: 6 out of 6.00 points Required: 1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.) Costs 1. Cost by Behavior Variable Fixed $ 19,000 90,000 $ 7,000 2. 3. Cost by Function Product Period $ 19,000 90,000 7,000 33,000 35,000 36,000 170,000 33,000 5. Plastic for casing Wages of assembly workers Property taxes on factory Accounting staff salaries Drum stands Rent cost of equipment for sales staff Upper management salaries Annual flat fee for factory maintenance service Sales commissions Machinery depreciation, straight-line 35,000 6. 36,000 7. 170,000 16,000 8. 16,000 25,000 25,000 9. 10. 42,000 42,000 [The following information applies to the questions displayed below.) Listed here are the total costs associated with the production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $516 each. Costs 1. Plastic for casing-$19,000 2. Wages of assembly workers--$90,000 3. Property taxes on factory-$7.000 4. Accounting staff salaries-$33,000 5. Drum stands (1,000 stands purchased)-$35.000 6. Rent cost of equipment for sales staff-$36.000 7. Upper management salaries-$170,000 8. Annual flat fee for factory maintenance service-$16,000 9. Sales commissions-$25 per unit 10. Machinery depreciation, straight-line-S42,000 9/16/2020 Assignment Print View 10. Award: 6 out of 6.00 points 2. Compute the manufacturing cost per drum set. TrueBeat Calculation of Manufacturing Cost per Drum Set Item Total cost Per unit cost $ Variable production costs Plastic for casing Wages of assembly workers Drum stands 19,000 $ 90,000 35,000 19 90 35 144,000 144 Total variable production costs Fixed production costs Property taxes on factory Annual fee for factory maintenance service Machinery depreciation 7,000 7 16.000 16 42,000 42 65,000 65 Total fixed production costs Total production cost $ 209,000 $ 209 2) Assume, due to the significant success of the drum sets, TrueBeat has obtained a contract to provide drum sets to a national merchandising chain. This contract is expected to increase TrueBeat's sales over the next 3 years. Current operations have a relevant range of 500 to 1,800 drum sets. TrueBeat's anticipates selling 3,000 units in Year 2, 5,000 units in Year 3 and 6,000 units in Year 4. Making the following cost changes, TrueBeat will increase their relevant range of production to between 4,000 and 8,000 drum sets. This significant increase to production will stair-step some of their costs. Specifically, the company will have to purchase additional equipment that will increase their machinery depreciation expense by 50% (Fixed overhead. The new equipment will allow TrueBeat to produce up to 10,000 drum sets a year. With increased production levels, TrucBeat will need to pay shift premium to assembly workers such that the average Direct labor will increase by $18 a unit. Additionally, production supervisor will be hired for $120,000 (fixed overhead). Additionally, the company providing factory maintenance services has agreed to a new contract. The new contract will include a fixed component (overhead) equal to half of the original flat fee and a variable component (overhead) that will be $0.25 per assembly wage dollars . The company needs to increase its sales staff. Rather than paying their sales staff commission only, TrueBeat will pay sales staff a flat salary (fixed S&A) equal to twice the amount paid in Year 1 and a reduced commission per drum set equal to 50% of the previous commission rate. . All other costs are considered consistent and within relevant range for production of 4,000 to 8,000 units. Use the information provided above to adjust amounts from the table in 1). Include the adjusted amounts in the table below. TrueBeat adjusted summarized data for production 4,000 to 8,000 units Adjust summarized data Average Cost Total per Unit Dollars Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling & administrative expense Variable selling & administrative expense AA Sales price per unit
