Concept explainers
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
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.
Want to see more full solutions like this?
Chapter 20 Solutions
EP FINANCIAL+MANAGERIAL ACCT. >CUSTOM<
Additional Business Textbook Solutions
Cost Accounting (15th Edition)
Principles Of Taxation For Business And Investment Planning 2020 Edition
Financial Accounting: Tools for Business Decision Making, 8th Edition
Horngren's Accounting (11th Edition)
FINANCIAL ACCT.FUND.(LOOSELEAF)
Accounting For Governmental & Nonprofit Entities
- The table shows a list of expenses involved in the production of custom snowboard bindings. For each item listed, state if the cost is manufacturing or sales and administration. If the cost is a manufacturing cost, state if it is direct materials, direct labor, or manufacturing overhead. 1f the cost is a manufacturing overhead cost, state if it is indirect materials, indirect labor, or another type of manufacturing overhead.arrow_forwardA furniture shop has enumerated the following cost determine the classification of the following according to Function (Manufacturing or Non Manufacturing), Traceability (Direct or Indirect ) and Timing Recognition( Product or Period). According to Function Traceability Timing of Recog Plywood Nails Taxes & Licenses Machine Operator Quality Controller Insurancearrow_forwardWheels, Inc. manufactures wheels for bicycles, tricycles, and scooters. For each cost given below, determine if the cost is a product cost or a period cost. If the cost is a product cost, further determine if the cost is direct materials (DM), direct labor (DL), or manufacturing overhead (MOH) and then determine if the product cost is a prime cost, conversion cost, or both. If the cost is a period cost, further determine if the cost is a selling expense or administrative expense (Admin). Cost (a) is answered as a guide. (If an answer does not apply, leave the box blank.) Product Product Period Cost DM DL MOH Prime Conversion Selling Admin. a. Metal used for rims X X b. Sales salaries c. Rent on factory d. Wages of assembly workers e. Salary…arrow_forward
- The wood used to make furniture is a variable cost to an enterprise that manufactures and sells household furniture. True or falsearrow_forwardthe packo company, a small manufacturer makes a variety of toolboxes. The company manufacturing operation and its cost. calculate the total costs per unit of each style of boxarrow_forwardClassifying costs Wheels, Inc. manufactures wheels for bicycles, tricycles, and scooters. For each cost given below, determine if the cost is a product cost or a period cost. If the cost is a product cost, further determine if the cost is direct materials (DM), direct labor (DL), or manufacturing overhead (MOH) and then determine if the product cost is a prime cost, conversion cost, or both. If the cost is a period cost, further determine if the cost is a selling expense or administrative expense (Admin). Cost (a) is answered as a guidearrow_forward
- A factory makes wooden chairs.Which of the following items would be most likely to behave as stepped costs? Wood used to make chair Factory supervisors' salaries Heating and light Staples to fix the fabric to the seat of the chairarrow_forwardA furniture manufacturer who follows ABC, will treat painting of furniture as A. Manufacturing overhead B. Unit-level activity cost C. Product-level activity cost D. Batch-level activity costarrow_forwardWhat types of costs are customarily included in the cost of manufactured products under (a) the absorption costing concept and (b) the variable costing concept? Which of the following costs would be included in the cost of a manufactured product according to the variable costing concept: (a) rent on factory building, (b) direct materials, (c) property taxes on factory building, (d) electricity purchased to operate factory equipment, (e) salary of factory supervisor, (f) depreciation on factory building, (g) direct labor? Marley Company has the following information for March: Sales $912,000 Variable cost of goods sold 474,000 Fixed manufacturing costs 82,000 Variable selling and administrative expenses 238,100 Fixed selling and administrative expenses 54,700 Determine (a) the manufacturing margin, (b) the contribution margin, and (c) operating income for Marley Company for the month of March.arrow_forward
- Following are selected costs of a company that manufactures computer chips. Classify each as either a product cost or a period cost. Then classify each of the product costs as direct material, direct labor, or overhead.arrow_forwardCost Classification Match each cost to the appropriate cost behavior pattern shown in graphs (a) through (l). Any graph can fit two or more patterns. The cost of lumber used to manufacture wooden kitchen tables. The cost of order fillers in a warehouse. When demand increases significantly, the number of order fillers is increased, and when demand falls off significantly, the number is decreased. The salary of the plant’s quality control inspector, who inspects each batch of products. The cost of water and sewer service to the manufacturing plant. The local municipality charges a fixed rate per gallon for usage up to 10,000 gallons and a higher charge per gallon for usage above that point. The cost of an internet connection of $23 per month. The cost of an internet connection of $10 per month plus $2 per hour of usage above 10 hours. The cost to make copies of a given document at a printing shop, where the per-copy charge is reduced for customers who make more than…arrow_forwardClassification of Costs Following is a list of costs from Oakland Company, a furniture manufacturer:1. Wood used in chairs2. Salaries of inspectors3. Lubricant used in machinery4. Factory rent5. Wages of assembly workers6. Factory workers’ compensation insurance7. Sandpaper8. Fabric used for upholstery9. Property taxes on manufacturing plant10. Depreciation on machineryRequired Classify each cost as direct or indirect assuming that the cost object is each item manufactured.Also indicate whether each cost is a variable or fixed cost.arrow_forward
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning