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 $463 each. Costs 1. Plastic for casing-$17,000 2. Wages of assembly workers-$87,000 3. Property taxes on factory-$5,000 4. Accounting staff salaries-$40,000 5. Drum stands (1,000 stands purchased)-$30,000 6. Rent cost of equipment for sales staff-$24,000 7. Upper management salaries-$150,000 8. Annual flat fee for factory maintenance service-$17,000 9. Sales commissions-$13 per unit 10. Machinery depreciation, straight-line 42,000 Problem 14-1A Part 1 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.)

Answer 1

		Cost by behavior		Cost by function
	Costs	Variable	Fixed	Product	Period
1	Plastic for casing	$                     17,000		$                 17,000
2	Wages of assembly workers	$                     87,000		$                 87,000
3	Property taxes on factory		$             5,000	$                   5,000
4	Accounting staff salaries		$           40,000		$           40,000
5	Drum stands	$                     30,000		$                 30,000
6	Rent cost of equipment for sales staff		$           24,000		$           24,000
7	Upper management salaries		$       1,50,000		$       1,50,000
8	Annual flat fee paid for maintenance services		$           17,000	$                 17,000
9	Sales commissions ($13 per unit sold)	$13 X number of units sold			$13 X number of units sold
10	Machinery depreciation - straight line		$           42,000	$                 42,000