Wollogong Group Ltd. Of New South Wales, Australia acquire its factory building about ten years

ago. Since the company had no immediate need for the extra space, the building was rented out

to another company for rental revenue of $ 30,000 per year. The renters lease will expire soon,

and rather than renewing the lease, the Company has decided to use the building itself to

manufacture a new product.

Direct materials cost for the new product will total $ 90 per unit. To have a place to store finished

units of products, the company will rent a small warehouse nearby. The rental cost will be $800

per month. In addition, the company will need to rent equipment for use in producing the new

product; the rental cost will be $ 5,000 per month. Workers will be hired to manufacture the new

product, with direct labor cost amounting to $ 75 per unit. The space in the annex will continue to

be depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.

Advertising costs for the new product will total $ 62,000 per year. It will be necessary to hire a

supervisor to oversee production. Her salary will be $ 3,500 per month. Costs of shipping the new

product to customers will be $ 12 per unit. Electrical costs of operating machines will be $ 1.80

per unit.

To have funds to purchase materials, meet payrolls, and so forth, the company will have to

liquidate some temporary investments. These investments are presently yielding a return of

$5,000 per year.

1. Make a list with all (11) costs listed above for the company with their respected amount, state for each one if these are variable costs, fixed costs, product costs, period costs, or opportunity costs.

Note: there may be costs that can be classified as multiple types of costs, please state all of them. (For example, a cost may be a fixed cost and a period cost)