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In: Accounting

Classify Costs Following is a list of various costs incurred in producing replacement automobile parts. With...

Classify Costs

Following is a list of various costs incurred in producing replacement automobile parts. With respect to the production and sale of these auto parts, classify each cost as either variable costs, fixed costs, or mixed costs.

1. Oil used in manufacturing equipment
2. Plastic
3. Property taxes, $165,000 per year on factory building and equipment
4. Salary of plant manager
5. Cost of labor for hourly workers
6. Packaging
7. Factory cleaning costs, $6,000 per month
8. Metal
9. Rent on warehouse, $10,000 per month plus $25 per square foot of storage used
10. Property insurance premiums, $3,600 per month plus $0.01 for each dollar of property over $1,200,000
11. Straight-line depreciation on the production equipment
12. Hourly wages of machine operators
13. Electricity costs, $0.20 per kilowatt-hour
14. Computer chip (purchased from a vendor)
15. Pension cost, $1.00 per employee hour on the job

Solutions

Expert Solution

Type of Cost
1. Oil used in manufacturing equipment Variable
2. Plastic Variable
3. Property taxes, $165,000 per year on factory building and equipment Fixed
4. Salary of plant manager Fixed
5. Cost of labor for hourly workers Variable
6. Packaging Variable
7. Factory cleaning costs, $6,000 per month Fixed
8. Metal Variable
9. Rent on warehouse, $10,000 per month plus $25 per square foot of storage used Mixed
10. Property insurance premiums, $3,600 per month plus $0.01 for each dollar of property over $1,200,000 Mixed
11. Straight-line depreciation on the production equipment Fixed
12. Hourly wages of machine operators Variable
13. Electricity costs, $0.20 per kilowatt-hour Variable
14. Computer chip (purchased from a vendor) Fixed
15. Pension cost, $1.00 per employee hour on the job Fixed

Reasons for selecting the type of cost

1. Variable - It will be used in the proportion of parts produced.

2. Variable - It will be used in the proportion of parts produced.

3. Fixed - Does not have effect with the increase of decrease in production

4. Fixed - Does not have effect with the increase of decrease in production

5. Variable - It will increase as the production will increase.

6. Variable - It will increase as the production will increase.

7. Fixed - Does not have effect with the increase of decrease in production

8. Variable - Its consumption will increase as the production will increase.

9. Mixed - Fixed upto an certain amount but variable after that

10. Mixed - Fixed upto an certain amount but variable after that

11. Fixed - Does not have effect with the increase of decrease in production

12. Variable - It will increase as the production will increase.

13. Variable - It will increase as the production will increase.

14. Fixed - Does not have effect with the increase of decrease in production

15. Fixed - Does not have effect with the increase of decrease in production

ekkarill92 answered 1 year ago
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