In: Accounting
Identify Fixed and Variable Costs
Intuit Inc. develops and sells software products for the personal finance market, including popular titles such as Quickbooks® 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. Packaging costs | |
b. Sales commissions | |
c. Property taxes on general offices | |
d. Shipping expenses | |
e. Straight-line depreciation of computer equipment | |
f. President’s salary | |
g. Salaries of software developers | |
h. Salaries of human resources personnel | |
i. Wages of telephone order assistants | |
j. Costs of providing online support | |
k. Users' guides |
Type of Costs | ||||||||||
a. Packaging costs | Variable Costs | |||||||||
b. Sales commissions | Variable Costs | |||||||||
c. Property taxes on general offices | Fixed Costs | |||||||||
d. Shipping expenses | Variable Costs | |||||||||
e. Straight-line depreciation of computer equipment | Fixed Costs | |||||||||
f. President’s salary | Fixed Costs | |||||||||
g. Salaries of software developers | Fixed Costs | |||||||||
h. Salaries of human resources personnel | Fixed Costs | |||||||||
i. Wages of telephone order assistants | Variable Costs | |||||||||
j. Costs of providing online support | Variable Costs | |||||||||
k. Users' guides | Variable Costs | |||||||||
The variable costs are the costs which varies with the level of activity and number of units sold or produced | ||||||||||
Fixed costs are the period costs, they remain the same month of month irrespective of the number of units produced or sold- They do not vary as per level of activity | ||||||||||