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Think total costs - do they change as the activity (i.e. production level) changes? 1. Following is a list of various costs incurred in
Think "total" costs - do they change as the activity (i.e. production level) changes? 1. Following is a list of various costs incurred in producing replacement automobile parts. With respect to the production and sale of these auto parts, classify each cost as variable, fixed, or mixed. REQUIRED: For each item on the list, write in the blank "V" if the cost is a Variable cost, "F" if the cost is Fixed cost, or "M" if the cost is a Mixed cost: A. Cost of labor for hourly production workers B. Factory cleaning costs, $6,000 per month C. Wages of machine operators D. Computer chips used in production (purchased from a vendor). E. Electricity costs, $0.20 per kilowatt-hour F. Metal used in production G. Salary of the plant manager H. Property taxes, $165,000 per year on factory building and equipment 1. Plastic used in production J. Oil used to maintain the manufacturing equipment K. Rent on warehouse, $10,000 per month plus $25 per square foot of storage used L. Property insurance premiums, $3,600 per month plus $0.01 for each dollar of property over $1,200,000 M. Retirement plan contributions, $1.00 per employee hour worked N. Product packaging. A. Ink used for screen printing on T-shirts B. Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used C. Thread used on T-shirts D. Electricity costs of $0.038 per kilowatt-hour E. Janitorial costs of $4,000 per month F. Advertising costs of $12,000 per month G. Accounting department salaries H. Color dyes for producing different colors of T-shirts 1. Salary of the production supervisor J. Salaries of internal pattern designers, K. Wages of sewing machine operators L. Property taxes on factory, building, and equipment M. Cotton and polyester cloth for T-shirts N. Maintenance costs with sewing machine company (The cost is $2,000 per year plus $0.001 for each machine hour of use.). 3. Seymour Clothing Co. manufactures a variety of clothing types for distribution to several major retail chains. The following costs are incurred in the production and sale of blue jeans. REQUIRED: For each item on the list, write in the blank "V" if the cost is a Variable cost, "F" if the cost is Fixed cost, or "M" if the cost is a Mixed cost: A. Shipping boxes used to ship orders.
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