Question

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Listed here are the total costs associated with the 2017 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $549 each.
  

	Costs
1.	Plastic for casing—$17,000
2.	Wages of assembly workers—$91,000
3.	Property taxes on factory—$6,000
4.	Accounting staff salaries—$40,000
5.	Drum stands (1,000 stands purchased)—$34,000
6.	Rent cost of equipment for sales staff—$36,000
7.	Upper management salaries—$220,000
8.	Annual flat fee for factory maintenance service—$21,000
9.	Sales commissions—$17 per unit
10.	Machinery depreciation, straight-line—$36,000

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.)
  

Answer 1

1) Classification of costs:
	Costs	Variable	Fixed	Product	Period
1	Plastic for casing	17000		17000
2	Wages of assembly workers	91000		91000
3	Property taxes on factory		6000		6000
4	Accounting staff salaries		40000		40000
5	Drum stands		34000	34000
6	Rent cost of equipment for sales staff	36000		36000
7	Upper management salaries		220000		220000
8	Annual flat fee for factory maintenance service		21000		21000
9	Sales commissions	17000		17000
10	Machinery depreciation SL		36000		36000
	Total	161000	357000	195000	323000