The following information applies to the questions displayed below. Listed here

Question

The following information applies to the questions displayed below. Listed here are the total costs associated with the 2015 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $500 each. Costs 1. Plastic for casing-$17,000 2. Wages of assembly workers-$82,000 3. Property taxes on factory- $5,000 4. Accounting staff salaries-$35,000 5. Drum stands (1,000 stands purchased)-$26,000 6. Rent cost of equipment for sales staff-$10,000 7. Upper management salaries-$125,000 8. Annual flat fee for factory maintenance service-$10,000 9. Sales commissions-$15 per unit 10. Machinery depreciation, straight-line-$40,000 5 value:

Explanation / Answer

TrueBeat Calculation of Manufacturing Cost per Drum set For the year ended December 31,2015 Item Total Per unit cost * Variable production costs Plastic for casing        17,000                          17 Wages of assembly workers        82,000                          82 Drum stands        26,000                          26 Total variable production costs      125,000                        125 Fixed production costs Property taxes on factory          5,000                            5 Annual fee for maintenance service        10,000                          10 Machinery depreciation        40,000                          40 Total fixed production costs          55,000                          55 Total production cost      180,000                        180 *Total cost / 1,000 drum sets

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