Question

Required Information Problem 18-1A Cost computation, classification, and analysis LO C2, C3 [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-$23,000 2. Wages of assembly workers-581, eee 3. Property taxes on factory-55, eee 4. Accounting staff salaries-533, eee 5. Drum stands (1,eee stands purchased)-$40,000 6. Rent cost of equipment for sales staff-548,000 7. Upper sanagement salaries-$180,000 8. Annual flat fee for factory maintenance service-$22,000 9. Sales commissions-$20 per unit 10. Machinery depreciation, straight-line-537,000

Answer 1

Costs 1. Plastic for casing 2. Wages of assembly workers 3. Property taxes on factory 4. Accounting staff salaries 5. Drum stands (1,000 stands outsourced) 6. Rent cost of equipment for sales staff 7. Upper management salaries 8. Annual flat fee paid for maintenance service 9. Sales commissions 10. Machinery depreciation, straight-line Cost by Behavior Variable Fixed $23,000 $81,000 $5,000 $33,000 $40,000 $48,000 $180,000 $22,000 $20 per unit $37,000 Cost by Function Product Period $23,000 $81,000 $5,000 $33,000 $40,000 $48,000 $180,000 $22,000 $20 per unit $37,000

EXPLANATION: Fixed costs are those costs which would remain the same in total irrespective of level of production or sales. It is a committed cost to be incurred by the firm whether it carries out operations or not. Variable costs are those costs which would remain the same per unit irrespective of level of production or sales. It is an unit cost to be incurred by the firm only when the firm carries out its business operation. Product costs are those costs which are incurred at the factory level during production process which may be direct cots or indirect costs; Period costs are those costs which are incurred outside the factory but for carrying out firm's selling and administrative related operating activities and financing activities.