Question

1. Give an example of a product you would like to make and sell (like coffee - just pretend).

a.What are some of the variable costs, fixed costs, mixed costs?

b. What are some of the product costs versus period costs?

c. What are the direct materials, direct labor, manufacturing overhead costs?

Write this out as if you were giving it to a potential business partner

Answer 1

1.a Variable cost example will include direct material required in production of coffee like coffee seeds or bean and seasoned labor wages required to farm coffee. Whereas fixed costs will include cost like salary cost of permanent employees like suoervisors. Mixed cost will include costs of operating a tractor in farm on rent, where rent would be a fixed cost and cost of running it from petrol or diesal would be a variable cost.

1.b Example of period cost can be rent of equipments taken on rent or depreciation on own equipments used for coffee production purpose while product costs can be direct material and direct labor

1.c Direct material cost would be coffee beans and seeds,wages of direct labor would be season labor employed and variable overhead would be transportation expenses to carry coffee

Hope this helps, if not please let know in comments. Please mark the answer as helpful for the efforts put, it will mean alot. Thanks