NAME: ACC 203 FS18 EXAM CHAPTERS 14-17 DUE MONDAY 7/2/18 at 12:30 4. (16 Points)

Question

NAME: ACC 203 FS18 EXAM CHAPTERS 14-17 DUE MONDAY 7/2/18 at 12:30 4. (16 Points) Marv's Furniture and Fixtures produces seats for mo movie theaters. Listed below are selected cost items for the seat production. Classify each cost as either fixed or variable, and either a product or a period cost by placing an x in the appropriate boxes. Cost by behavior ariable Fixed or Cost by function Product Period Assembly labor actory property taxes. Sales office rent. Sales manager's salary Depreciation on factory equipment

Explanation / Answer

Variable cost varies with level of output whereas fixed cost remain constant irrespective of change in output .Period cost is a cost that is charged to income statement in the year in which it is incurred whereas product cost is added to cost of product

cost behavior cost by function Variable Fixed Product period Fabric for seats variable product since thecost will vary with number of seats produced and directly related to manufacturing of product Assembly hours Variable product since thecost will vary with number of hours taken to produce seats and directly related to manufacturing of product Factory property taxes Fixed product property taxes are fixed in nature but indirectly relates to manufacturing of product Accounting staff salaries Fixed period this cost has no relation to manufacturing of product and has no relation to output produced sales office rent Fixed period this cost has no relation to manufacturing of product and has no relation to output produced sales manager salaries Fixed period this cost has no relation to manufacturing of product and has no relation to output produced Depreciation on factory equipment Fixed product depreciation is constant over the useful life and has no relation to number of output produced(it will be incurred ) .since it relates to factory it is part of product cost sales commissions variable period sales commission is paid as a % of sales .so as sales varies ,sales commission will also vary .since it has no relation with manufacturing of product ,it is a period cost .

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