In: Accounting
You are required to classify the costs related to producing this fragrance by completing the table below by placing an "X" in a box that matches a cost item to the appropriate cost classifications. A cost item may be classified under more than one classification and in that case, you may place more than one "X" for those cost items. Similar, cost classifications may include more than one cost item, in which case those cost classifications may have more than one “X”. For example, cost may be a sunk cost and at the same time a manufacturing overhead cost, and so there will be an "X" placed under each of these classification against the cost.
Direct production cost |
Production overhead costs |
Sales and administrative cost |
Variable cost |
Fixed cost |
Sunk cost |
Differential cost |
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Factory rent |
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The cost of the course in perfume composition |
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Rent and insurance of equipment |
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Material cost |
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Labor cost |
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Sales manager salary |
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Promotion cost |
2) Explain the reasons behind your classifications in requirement 1. Justify your answers.
3) The Company is expected to produce 16,000 bottles of the perfume. In accordance to the information provided on requirement 1, you are required to calculate the following values with the equations clearly written in the report:
3.1 What is the value of the total conversion cost? Show your work
3.2 What is the value of the total cost of production? Show your work
3.3 What is the value of the total period costs? Show your work
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