Harv\'s HiFi Sound Systems produces speakers for movie theaters that sell for $1

Question

Harv's HiFi Sound Systems produces speakers for movie theaters that sell for $1,200 each. Listed below are selected cost items for the production of 600 units. Cost of behavior Cost by function Variable Fixed Product Period Plastic for speaker casings........$150,000 Assembly labor.........................$200,000 Factory property taxes...............$22,000 Acct. staff salaries.....................$75,000 Sales office rent........................$10,000 Sales manager's salary..............$60,000 Depreciation on factory equipment $ 23,000 Sales commissions.....................$36,000 (a) Classify each cost as either fixed or variable, and either a product or a period cost. (b) Calculate the total contribution margin if 600 units were produced and sold.

Explanation / Answer

a) Plastic for speaker casings- variable/product
Assembly labor- variable/product
Factory property taxes- fixed/period
Acct. staff salaries- fixed/period
Sales office rent- fixed/period
Sales manager's salary- fixed/period
Depreciation on factory equipment- fixed/period
Sales commission- variable

b) $334,000

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