Chapter 5, Problem 1E

Classify Costs

Following is a list of various costs incurred in producing replacement automobile parts. With respect to the production and sale of these auto parts, classify each cost as either variable, fixed, or mixed.

1. 1. Oil used in manufacturing equipment
2. 2. Plastic
3. 3. Property taxes, $165,000 per year on factory building and equipment
4. 4. Salary of plant manager
5. 5. Cost of labor for hourly workers
6. 6. Packaging
7. 7. Factory cleaning costs, $6,000 per month
8. 8. Metal
9. 9. Rent on warehouse, $10,000 per month plus $25 per square foot of storage used
10. 10. Property insurance premiums, $3,600 per month plus $0.01 for each dollar of property over $1,200,000
11. 11. Straight-line depreciation on the production equipment
12. 12. Hourly wages of machine operators
13. 13. Electricity costs, $0.20 per kilowatt-hour
14. 14. Computer chip (purchased from a vendor)
15. 15. Pension cost, $1.00 per employee hour on the job