Question

Required information Problem 14-1A Cost computation, classification, and analysis LO C2, C3 (The following information applie
9. Sales commission-$24 per unit 10. Machinery depreciation, straight-line $38,000 Problem 14-1A Part 1 HE Required: 1. Class
Problem 14-1A Part 2 2. Compute the manufacturing cost per drum set. TrueBeat Calculation of Manufacturing Cost per Drum Set
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Answer #1

Variable costs are the costs that change with the activity level

Fixed costs are the costs that do not change with the activity level

Product costs are related to the manufacturing process

Period costs are related to the selling and administrative expenses

Part 1

Costs by Behavior

Cost by Function

Costs

Variable

Fixed

Product

Period

1

Plastic for casing

15000

15000

2

Wages of assembly workers

87000

87000

3

Property taxes on factory

6000

6000

4

Accounting staff salaries

39000

39000

5

Drum stands

38000

38000

6

Rent cost of equipment for sales staff

12000

12000

7

Upper management salaries

155000

155000

8

Annual flat fee for factory maintenance service

21000

21000

9

Sales commissions

24000

24000

10

Machinery depreciation, straight-line

38000

38000

Sales commissions = $24 × 1,000 = $24,000

Part 2

TrueBeat

Calculation of Manufacturing Cost per Drum Set

Item

Total cost

Per unit cost

Plastic for casing

15000

15

Wages of assembly workers

87000

87

Drum stands

38000

38

Total variable production costs

140000

140

Fixed Production costs

Property taxes on factory

6000

6

Annual flat fee for factory maintenance service

21000

21

Machinery depreciation

38000

38

Total fixed production costs

65000

65

Total production costs

$205000

$205

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