xercise 1-14 (Static) Cost Classification (L01-2, LO1-3, L01-4, LO1-5) Vollogong Group Ltd. of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has Fented 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 materials cost for the new product will total $80 per unit. To have a place to store its finished goods, the company will renta 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 payrolls, and so forth, the company will have to liquidate 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 (column 2), indicate whether the cost is fixed or variable. With respect to cost classifications for manufacturers (column 3), 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 preparing financial statements (column 4), indicate whether the item is a product cost or period cost. Finally, in terms of cost classifications for decision making (column 5), identify any items that are sunk costs or opportunity costs. If you identify an item as an opportunity cost, then select "none" as your answer in columns 2-4, Cost Classifications for: Preparing Manufacturers Financial Statements Name of the Cost Predicting Cost Behavior Decision Making Rental revenue forgone, $30,000 per year Direct materials cost $80 per unit NO BARUD COLLEGE LOOKEX Question 10 - Chapter 1- Connect X Martinez Company's Rolevant Solved Martinez Company's X https://ezto meducation.com/ext/map/index.html?_contcontexternal_browser=0&launchUrlahttps%25B Help To provide 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 $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 (column 2, indicate whether the cost is forced or variable. With respect to cost classifications for manufacturers (column 3). 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 preparing financial statements (column 4), indicate whether the item is a product cost or period cost. Finally, in terms of cost classifications for decision making column 5), identify any items that are sunk costs or opportunity costs. If you identify an item as an opportunity cost, then select "none" as your answer in columns 24 Name of the Cost Predicting Cost Behavior Cost Classification for Preparing Financial Statements Decision Makina Rental revenue forgone. $30.000 per year Drei materials cost $80 per unit cost of warehouse $500 per month Rental com foment. $4.000 per month Direct laboro per unit Depreciation of the next 58.000 per you Advertol 160.000 per year Supervisory 5.500 per month Electroly forma, 120 per Shipping cosa per un Rumamedon me 1.000 year Fixed Variable None so 90 D $ 2 3 % 5 4 6 & 7 8 9 0 vide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary investments. Investments are presently yielding a return of $3,000 per year. ired: the table shown below, describe each of the costs associated with the new product decision in four ways. In terms of cost ifications for predicting cost behavior (column 2), indicate whether the cost is fixed or variable. With respect to cost classifications manufacturers (column 3). If the item is a manufacturing cost, indicate whether it is direct materials, direct labor, or manufacturing head. If it is a nonmanufacturing cost, then select "none" as your answer. With respect to cost classifications for preparing financial aments (column 4), indicate whether the item is a product cost or period cost. Finally, in terms of cost classifications for decision cing (column 5), identify any items that are sunk costs or opportunity costs. If you identify an item as an opportunity cost, then select ne" as your answer in columns 2-4. Cost Classifications for: Preparing Manufacturers Financial Statements Predicting Cost Behavior Nome of the Cost Decision Making Contal revenue forgono, $30,000 per year Direct materials cont, 500 per unit Rental cost of warehouse, $500 per month Rental cost of equipment. $4,000 per month Direct labor cool, 360 per unit Depreciation of the annex space, $8,000 per year Advertising cost $60,000 per your Supervisor's salary, 53,500 per month Electricity for machines. $1.20 per unit Shipping cost $9 per unit Return earned on investments, $3.000 per year Direct materials Direct labor Manufacturing overhead None new product decision in four ways. In terms of cost cost is fixed or variable. With respect to cost classifications ether it is direct materials, direct labor, or manufacturing er. With respect to cost classifications for preparing financial cost. Finally, in terms of cost classifications for decision sts. If you identify an item as an opportunity cost, then select Cost Classifications for: Preparing Manufacturers Financial Statements Decision Making Product cost Period cost None nd so forth, the con 2000 per year. sts associated with the new product decision in four ways. In terms of cost indicate whether the cost is fixed or variable. With respect to cost classifications curing cost, indicate whether it is direct materials, direct labor, or manufacturing "none" as your answer. With respect to cost classifications for preparing financial product cost or period cost. Finally, in terms of cost classifications for decision costs or opportunity costs. If you identify an item as an opportunity cost, then select Cost Classifications for: Preparing Manufacturers Financial Statements Decision Making Predicting Cost Bohavior Sunk cost Opportunity cost