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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Identify fixed and variable costs
Intuit Inc. (INTU) develops and sells software products for the personal finance market, including popular titles such as Quicken" and TurboTax". Classify each of the following costs and expenses for this company as either variable or fixed to the number of units produced and sold:
a.Advertising
b.CDs
C.Commissions for online sales personnel
d.Cos! of registering each unit sold
e. Hourly wages of help desk employees
f. Packaging costs
g.Salaries of human resources personnel h.Salaries of software developers
i. Salary of Chief Financial Officer
j. Shipping expenses
k.Straight-line depreciation on equipment
I. Writing of user's guides

To determine

Concept Introduction:

Fixed Cost: Those costs which are fixed in totality over a period then it are called fixed cost. Fixed cost is different on unit basis.

Variable cost: Those costs which are changes in totality when the output changes but its remains same on per unit basis.

To Identify:

List the various cost as variable cost, fixed cost, and mixed cost.

Explanation
    a. AdvertisingFixed cost because it is a time cost or period cost which basically occurs on the basis of time.
    b. CDsVariable cost because this cost only dependent on the product manufactured.
    c. Commission for online sales personnelVariable cost because this cost only dependent on the product manufactured and sold
    d. Cost of registering each unit soldFixed cost because it is a time cost or period cost which basically occurs on the basis of time.
    e. Hourly wages of help desk employeesVariable cost because this cost only dependent on the no. of quarries solved by the employees.
    f. Packaging costsVariable cost because this cost only dependent on the product manufactured and sold
    g...

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