Consider the following information: Alma’s Company manufactures furniture, including tables. Selected costs are given below: 1....

Consider the following information: Alma’s Company manufactures furniture, including tables. Selected costs are given below:

1. The tables are made of wood that costs $100 per table.

2. The tables are assembled by workers, at a wage cost of $40 per table.

3. Workers assembling the tables are supervised by a factory supervisor who is paid $38,000

per year.

4. Electrical costs are $2 per machine-hour. Four machine-hours are required to produce a table.

5. The depreciation on the machines used to make the tables totals $10,000 per year. The

machines have no resale value and do not wear out through use.

6. The salary of the president of the company is $100,000 per year.

7. The company spends $250,000 per year to advertise its products.

8. Salespersons are paid a commission of $30 for each table sold.

9. Instead of producing the tables, the company could rent its factory space for $50,000 per year.

Required:

Classify these costs according to the various cost (variable, fixed, Period , product, sunk and opportunity costs ).

Expert Solution

					Product cost
S No	Type of cost	Variable cost	Fixed cost	Period (selling and administrative cost)	Direct Materials	Direct Labor	Manufacturing overhead	Sunk cost	Opportunity cost
1	The tables are made of wood that costs $100 per table	Yes			Yes
2	The tables are assembled by workers, at a wage cost of $40 per table.	Yes				Yes
3	Workers assembling the tables are supervised by a factory supervisor who is paid $38,000 per year.		Yes				Yes
4	Electrical costs are $2 per machine-hour. Four machine-hours are required to produce a table.	Yes					Yes
5	The depreciation on the machines used to make the tables totals $10,000 per year. The machines have no resale value and do not wear out through use.		Yes				Yes	Yes
6	The salary of the president of the company is $100,000 per year.		Yes	Yes
7	The company spends $250,000 per year to advertise its products.		Yes	Yes
8	Salespersons are paid a commission of $30 for each table sold.	Yes		Yes
9	Instead of producing the tables, the company could rent its factory space for $50,000 per year.								Yes

ekkarill92 answered 2 years ago

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