Listed here are the total costs associated with the 2017 production of 1,000 dru

Question

Listed here are the total costs associated with the 2017 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $523 each. Costs 1. Plastic for casing—$23,000 2. Wages of assembly workers—$86,000 3. Property taxes on factory—$6,000 4. Accounting staff salaries—$33,000 5. Drum stands (1,000 stands purchased)—$39,000 6. Rent cost of equipment for sales staff—$48,000 7. Upper management salaries—$175,000 8. Annual flat fee for factory maintenance service—$17,000 9. Sales commissions—$26 per unit 10. Machinery depreciation, straight-line—$45,000 Required: 1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.)

Explanation / Answer

Variable / Product / Fixed Period Cost: Plastic for casing Variable Product Wages for assembly workers Variable Product Property Taxes on Factory Fixed Product Accounting staff salaries Fixed Period Drum Stands Variable Product Rent cost of equipment for sales staff Fixed Period Upper management salaries Fixed Period Factory maintenance Service Fixed Product Sales commission Variable Period Machinery Depreciation Fixed Product

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