The following is a list of various costs of producing sweatshirts. Classify each
ID: 2498298 • Letter: T
Question
The following is a list of various costs of producing sweatshirts. Classify each cost as either a variable, fixed, or mixed cost for units produced and sold.
(a)
Lubricants used to oil machinery.
(b)
Warehouse rent of $6,000 per month plus $.50 per square foot of storage used.
(c)
Thread.
(d)
Electricity costs of $.025 per kilowatt-hour.
(e)
Janitorial costs of $2,000 per month.
(f)
Advertising costs of $10,000 per month.
(g)
Sales salaries.
(h)
Color dyes for producing different colors of sweatshirts.
(i)
Salary of the production supervisor.
(j)
Straight-line depreciation on sewing machines.
(k)
Patterns for different designs. Patterns typically last many years before being replaced.
(l)
Hourly wages of sewing machine operators.
(m)
Property taxes on factory, building, and equipment.
(n)
Cotton and polyester cloth.
(o)
Maintenance costs with sewing machine company. The cost is $2,000 per year plus $.001 for each machine hour of use.
(a)
Lubricants used to oil machinery.
(b)
Warehouse rent of $6,000 per month plus $.50 per square foot of storage used.
(c)
Thread.
(d)
Electricity costs of $.025 per kilowatt-hour.
(e)
Janitorial costs of $2,000 per month.
(f)
Advertising costs of $10,000 per month.
(g)
Sales salaries.
(h)
Color dyes for producing different colors of sweatshirts.
(i)
Salary of the production supervisor.
(j)
Straight-line depreciation on sewing machines.
(k)
Patterns for different designs. Patterns typically last many years before being replaced.
(l)
Hourly wages of sewing machine operators.
(m)
Property taxes on factory, building, and equipment.
(n)
Cotton and polyester cloth.
(o)
Maintenance costs with sewing machine company. The cost is $2,000 per year plus $.001 for each machine hour of use.
Explanation / Answer
(a)
Lubricants used to oil machinery.
(a)
Lubricants used to oil machinery. – Mixed cost because some of the lubrications has to be done on machine if it used or not. But is the production is increase the use of machine will increase. Hence more lubrication would be required.
b)
Warehouse rent of $6,000 per month plus $.50 per square foot of storage used.
$6000 is the fixed cost but per foot storage is variable because it would change with the levels of production
c)
Thread.
It is pure variable expense as it is direct material and will change with the production levels
d)
Electricity costs of $.025 per kilowatt-hour
It is also a variable cost which will change with various production levels
e)
Janitorial costs of $2,000 per month.
It is a fixed cost and has to be incurred irrespective of any production levels
f)
Advertising costs of $10,000 per month.
It is a fixed cost and has to be incurred irrespective of any production levels
g)
Sales salaries –
It is a fixed cost and has to be incurred irrespective of any production levels
h)
Color dyes for producing different colors of sweatshirts.
It is pure variable expense as it is direct material and will change with the production levels
i)
Salary of the production supervisor.
It is a fixed cost and has to be incurred irrespective of any production levels
j)
Straight-line depreciation on sewing machines.
It is a fixed cost and has to be incurred irrespective of any production levels
k)
Patterns for different designs. Patterns typically last many years before being replaced.
It is pure variable expense as it is direct material and will change with the production levels
l)
Hourly wages of sewing machine operators.
It is pure variable expense as it is direct labor and will change with the production levels
m)
Property taxes on factory, building, and equipment.
It is a fixed cost and has to be incurred irrespective of any production levels
n)
Cotton and polyester cloth.
It is pure variable expense as it is direct material and will change with the production levels
o)
Maintenance costs with sewing machine company. The cost is $2,000 per year plus $.001 for each machine hour of use.
$ 2000 is fixed and .001 per hour is variable
(a)
Lubricants used to oil machinery.
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