Question

For each cost item below, indicate whether it would be variable or fixed with respect to the number of units produced and sold: and then whether it would be a selling cost, an administrative cost or a manufacturing cost. If it is a manufacturing cost, indicate if it is a direct cost or an indirect cost with respect to the units of product (Ex provided #1 & #2)

		Variable or	Selling	Administrative	Manufacturing (Product) Cost
	Cost Item	Fixed	Cost	Cost	Direct	Indirect
1.	Property taxes, factory	F				X
2.	Boxes used for packaging detergent produced by the company	V			X
3.	Salespersons’ commissions
4.	Supervisor’s salary, factory
5.	Depreciation, executive autos
6.	Wages of workers assembling computers
7.	Insurance, finished goods warehouses
8.	Lubricants for production equipment
9.	Advertising costs
10.	Microchips used in producing calculators
11.	Shipping costs on merchandise sold
12.	Magazine subscriptions, factory lunchroom
		Variable or	Selling	Administrative	Manufacturing (Product) Cost
	Cost Item	Fixed	Cost	Cost	Direct	Indirect
13.	Thread in a garment factory
14.	Executive life insurance
15.	Ink used in textbook production
16.	Fringe benefits, materials handling workers
17.	Yarn used in sweater production
18.	Wages of receptionist, executive offices

Answer 1

	Particulars	Variable (V) of Fixed (F)	Selling Cost	Administrative Cost	Manufacturing cost
					Direct	Indirect
1.	Property taxes, factory	F				X
2.	Boxes used for packaging detergent produced by the company	V			X
3.	Salespersons’ commissions	V	X
4.	Supervisor’s salary, factory	F				X
5.	Depreciation, executive autos	F		X
6.	Wages of workers assembling computers	V			X
7.	Insurance, finished goods warehouses	F		X
8.	Lubricants for production equipment	V				X
9.	Advertising costs	F	X
10.	Microchips used in producing calculators	V			X
11.	Shipping costs on merchandise sold	V	X
12.	Magazine subscriptions, factory lunchroom	F		X
13.	Thread in a garment factory	V			X
14.	Executive life insurance	F		X
15.	Ink used in textbook production	V			X
16.	Fringe benefits, materials handling workers	F				X
17.	Yarn used in sweater production	V			X
18.	Wages of receptionist, executive offices	F		X