Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 20, Problem 1TI

Following is a list of costs for a furniture manufacturer that specializes in wood tables. Classify each cost as variable, fixed, or mixed relative to the number of tables produced and sold.

Wood used to build tables

Expert Solution & Answer
Check Mark
To determine

Identify the given cost as variable, fixed, or mixed relative to number of tables produced and sold in a furniture manufacturer.

Explanation of Solution

Variable cost: A variable cost is the cost that proportionately changes with the changes in the activity base such as units of production.

Fixed Cost: It is the cost that remains constant in total dollar amount irrespective to the changes in the activity base such as units of production.

Mixed Cost: It refers to the costs that possess characteristics of both fixed cost and variable cost.

Identify the given cost as variable, fixed, or mixed relative to number of tables produced and sold in a furniture manufacturer.

Wood used to build tables is a variable cost. This is because it is a direct material cost to be used for making finished goods (tables) ready to be sold. The cost would change with the change in the number of units to be produced.

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Chapter 20 Solutions

Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)

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