Question

A company has the following: Direct Labor: $3,000 Factory Rent: $700 Office Rent: $500 Depreciation (using...

A company has the following:

Direct Labor: $3,000

Factory Rent: $700

Office Rent: $500

Depreciation (using straight-line) on Office Equipment: $400

Sales Commissions: $1,500

Indirect Materials: $50

Direct Materials: $5,000

Based only on the above, total variable costs is:

Multiple Choice

  • $6,900

  • $9,550

  • $10,750

  • $8,000

Business   Accounting   
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Homework Answers

Answer #1

Total variable cost=$9,550

Workings:-

Particulars Amt. in $
Direct labor        3,000
Sales commissions        1,500
Indirect materials             50
Direct materials        5,000
Total        9,550

Note:- Factory rent, office rent and depreciation are fixed cost in nature.

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