Question

[The following information applies to the questions displayed below.) 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-$18,000 2. Wages of assembly workers-$92,000 3. Property taxes on factory-$7,000 4. Accounting staff salaries-$35,000 5. Drum stands (1,000 stands purchased) $39,000 6. Rent cost of equipment for sales staff-$48,000 7. Upper management salaries-$170,000 8. Annual flat fee for factory maintenance service-$14,000 9. Sales commissions-$19 per unit 10. Machinery depreciation, straight-line-$38,000 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.) Cost by Behavior Variable Fixed $ 18,000 Cost by Function Product Period $ 18,000 Costs 1. Plastic for casing 2. Wages of assembly workers 3. Property taxes on factory 4. Accounting staff salaries 5. Drum stands Rent cost of equipment for sales staff 7. Upper management salaries 8. Annual flat fee for factory maintenance service Sales commissions 10. Machinery depreciation, straight-line 6. 9.

Answer 1

Drumbeats Company

Statement of Cost Classification

		Cost By	Behaviour	Cost by	Function
S.No	Costs	Variable	Fixed	Product	Period
1	Plastic for Casing	18,000		18,000
2	Wages of Assembly Line Workers	92,000		92,000
3	Property Taxes on Factory		7,000	7,000
4	Accounting Staff Salaries		35,000		35,000
5	Drum Stands	39,000		39,000
6	Rent Cost of Equipment for Sales Staff		48,000		48,000
7	Upper Management Salaries		170,000		170,000
8	Annual Flat Fee for Factory Maintenance Services		14,000	14,000
9	Sales Commissions	19,000			19,000
10	Machinery Depreciation Straight Line		38,000	38,000

Notes

Sales Commission = 1,000 Drum Sets *$ 19 per Drum Set = $ 19,000