Question

Dutch Pantry Inc. operates full-service family restaurants in eastern states. To ensure consistent quality, many of the items served in the restaurant are prepared in a central-food processing plant. Classify each of the following costs and expenses of the food processing plant as either variable or fixed.

1. Garbage collection expense
2. Salad dressing
3. Office salaries
4. Depreciation of equipment (straight-line method)
5. Cooking oil
6. Experimental costs (includes salaries of Nutritionists)
7. Cleaning supplies
8. spices
9. Water
10. Property taxes
11. Electricity

Answer 1

Fixed expenses will remain fixed irrespective of the items processed. Variable expenses will change according to the number or quantity of items processed. Based on this, classification of given expenses into fixed or variable is given below:

1. Garbage collection expense: Variable expense

2. Salad dressing: Variable expense

3. Office salaries: Fixed expense

4. Depreciation of equipment: Fixed expense

5. Cooking oil: Variable expense

6. Experimental costs: Fixed expense

7. Cleaning supplies: Variable expense

8. Spices: Variable expense

9. Water: Variable expense

10. Property taxes: Fixed expense

11. Electricity: Variable expense