Question

Listed here are the total costs associated with the 2017 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $523 each. Costs 1. Plastic for casing—$23,000 2. Wages of assembly workers—$86,000 3. Property taxes on factory—$6,000 4. Accounting staff salaries—$33,000 5. Drum stands (1,000 stands purchased)—$39,000 6. Rent cost of equipment for sales staff—$48,000 7. Upper management salaries—$175,000 8. Annual flat fee for factory maintenance service—$17,000 9. Sales commissions—$26 per unit 10. Machinery depreciation, straight-line—$45,000 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

				Variable /	Product /
				Fixed	Period
Cost:
Plastic for casing				Variable	Product
Wages for assembly workers				Variable	Product
Property Taxes on Factory				Fixed	Product
Accounting staff salaries				Fixed	Period
Drum Stands				Variable	Product
Rent cost of equipment for sales staff				Fixed	Period
Upper management salaries				Fixed	Period
Factory maintenance Service				Fixed	Product
Sales commission				Variable	Period
Machinery Depreciation				Fixed	Product