Question

Classify each cost as being either variable or fixed with respect to the number of units produced and sold. Also classify each cost as either a period or a product cost. Cost Item Variable or Fixed? Product or Period? 1. Salary of a supervisor overseeing production of printers at Dell. 2. Commissions paid to automobile salespersons. 3. Hamburger buns in a Wendy’s restaurant. 4. Insurance on IBM’s corporate headquarters. 5. Advertising by a dental office. 6. Insurance on a Bausch & Lomb factory producing contact lenses. 7. Depreciation of factory lunchroom facilities at a General Electric plant. 8. Steering wheels installed in BMWs. 9. Shipping desks via UPS by a manufacturer to its customers. 10. Apples processed and canned by Del Monte.

Answer 1

1. Salary of a supervisor overseeing production of printers at Dell.
Fixed, Product

2. Commissions paid to automobile salespersons.
Variable, Period

3. Hamburger buns in a Wendy’s restaurant.
Variable, Product

4. Insurance on IBM’s corporate headquarters.
Fixed, Period

5. Advertising by a dental office.
Fixed, Period

6. Insurance on a Bausch & Lomb factory producing contact lenses.
Fixed, Product

7. Depreciation of factory lunchroom facilities at a General Electric plant.
Fixed, Product

8. Steering wheels installed in BMWs.
Variable, Product

9. Shipping desks via UPS by a manufacturer to its customers.
Variable, Period

10. Apples processed and canned by Del Monte.
Variable, Product