Question

Classify the following items as variable (V), fixed (F), or mixed (M): Rent for the factory building VOF OM Depreciation on production equipment VOF M Production managers' salariesV OF OM Production workers' wages v OF M Cost of materials used in production Ov OF M Fire insurance for the plant Ov OF OM Sales commissions (3% of sales) O V O F O M Sales managers' ales commissions) OV OF M total compensation (salary +

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MANAGERIAL ACCOUNTING QUESTIONS

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Answer 1

		Overhead	Details;
1	Rent for the factory building	Fixed	fixed amount of rent
2	Depreciation on Production equipment	Fixed	Annual fixed charges of depreciation
3	Production Manager's salary	Fixed	Fixed amount of salary to manager
4	Production Worker's wages	Variable	Based of number of hours worked.
5	Cost of materials used in production	Variable	Based on material quantity used for production
6	Fire insurance for the plant	Fixed	Fixed amount of insurance premium.
7	Sales commissions ( 3% of sales )	Variable	it is a percentage of sales.
8	Sales manager's total compensation ( salary + sales commissions )	Mixed   salary is fixed and commission is variable