Question

Seymour Clothing Co. manufactures a variety of clothing types for distribution to several major retail chains. The following costs are incurred in the production and sale of blue jeans:

Required:

Identify each cost listed below as variable costs, fixed costs, or mixed cost.

a. Shipping boxes used to ship orders
b. Consulting fee of $200,000 paid to industry specialist for marketing advice
c. Straight-line depreciation on sewing machines
d. Salesperson's salary, $10,000 plus 2% of the total sales
e. Fabric
f. Dye
g. Thread
h. Salary of designers
i. Brass buttons
j. Legal fees paid to attorneys in defense of the company in a patent infringement suit, $50,000 plus $87 per hour
k. Insurance premiums on property, plant, and equipment, $70,000 per year plus $5 per $30,000 of insured value over $8,000,000
l. Rental costs of warehouse, $5,000 per month plus $4 per square foot of storage used
m. Supplies
n. Leather for patches identifying the brand on individual pieces of apparel
o. Rent on plant equipment, $50,000 per year
p. Salary of production vice president
q. Janitorial services, $2,200 per month
r. Wages of machine operators
s. Electricity costs of $0.10 per kilowatt-hour
t. Property taxes on property, plant, and equipment

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Answer 1

a. Variable cost

b. Fixed cost

c. Fixed cost

d. Mixed cost

e. Variable cost

f. Variable cost

g. Variable cost

h. Fixed cost

i. Variable cost

j.Mixed cost

k. Mixed cost

l. Mixed cost

m.Variable cost

n. Variable cost

o. Fixed cost

p. Fixed cost, if there is no variable component in the salary.

q. Fixed cost

r. Variable cost

s. Variable cost.

t. Fixed cost