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Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small

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Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product. Direct materiais cost for the new product will total $80 per unit. To have a place to store its finished goods, the company will rent a small warehouse for $500 per month. In addition, the company must rent equipment for $4,000 per month to produce the new product. Direct laborers will be hired and paid $60 per unit to manufacture the new product As in prior years, the space in the annex will continue to be depreciated at $8,000 per year. The annual advertising cost for the new product will be $50,000. A supervisor will be hired and paid $3,500 per month to oversee production. Electricity for operating machines will be $1.20 per unit. The cost of shipping the new product to customers will be $9 per unit. To provide funds to purchase materials, meet payrolis, and se forth, the company will have to licuidate some temporary investments These investments are presently yielding a return of $3.000 per year Required: Using the table shown below, describe each of the costs associated with the new product decision in four ways. - In terms of cost classifications for predicting cost behavior, indicate whether the cost is flxed or variable - With respect to cost classifications for manufacturers if the item is a manufacturing cost, indicate whether it is direct materials, direct labor, or manufacturing overhead. If it is a nonmanufacturing cost. then select "none" as your answer. - With respect to cost classifications for preporing financial statements, indicate whether the item is a product cost or period cost. - In terms of cost classifications for decision making, identify any items that are sunk costs or opportunity costs Select "none" if neither category applies. Note: If vou identify an item as an opportunity cost, then select "none" as your answer in columns 2 through 4. Note: If you identify an item as an opportunity cost, then select "none" as your answer in columns 2 through 4

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