Question

Roper Furniture manufactures office furniture and tracks cost data across their process. The following are some of the costs that they incur. Classify these costs as fixed or variable costs, and as product costs or period costs:

1. Wood used to produce desks ($125.00 per desk)
2. Production labor used to produce desks ($15 per hour)
3. Production supervisor salary ($45,000 per year)
4. Depreciation on factory equipment ($60,000 per year)
5. Selling and administrative expenses ($45,000 per year)
6. Rent on corporate office ($44,000 per year)
7. Nails, glue, and other materials required to produce desks (varies per desk)
8. Utilities expenses for production facility
9. Sales staff commission (5% of gross sales)

Answer 1

			Supporting Explanations
A)	Variable Costs	Product Costs	It comes under direct materials which varies due to production volume.
B)	Variable Costs	Product Costs	It comes under direct labor which varies due to production volume.
C)	Fixed Costs	Product Costs	It comes under overhead costs and it does not varie but constant relates to production.
D)	Fixed Costs	Product Costs	It comes under overhead costs and it does not varie but constant relates to production.
E)	Fixed Costs	Period Costs	It is a non-production costs which does not varie but constant.
F)	Fixed Costs	Period Costs	It is a non-production costs which does not varie but constant.
G)	Variable Costs	Product Costs	It is a production costs that varies due to changes in the production volume.
H)	Variable Costs	Product Costs	It is a production costs that varies due to changes in the production volume.
I)	Variable Costs	Period Costs	It is a non-production costs which varies due to change in the sales.