Question

Intuit Inc. develops and sells software products for the personal finance market, including popular titles such as Quickbooks® and TurboTax®. Classify each of the following costs and expenses for this company as either variable or fixed to the number of units produced and sold:

a. Packaging costs
b. Sales commissions
c. Property taxes on general offices
d. Shipping expenses
e. Straight-line depreciation of computer equipment
f. President’s salary
g. Salaries of software developers
h. Salaries of human resources personnel
i. Wages of telephone order assistants
j. Costs of providing online support
k. Users' guides

Answer 1

Solution:

From the given data we need to identify fixed and variable costs:

	Costs and expenses	Variable (or) Fixed
a.	Packaging costs	Variable
b.	Sales commissions	Variable
c.	Property taxes on general offices	Fixed
d.	Shipping expenses	Variable
e.	Straight-line depreciation of computer equipment	Fixed
f.	President’s salary	Fixed
g.	Salaries of software developers	Fixed
h.	Salaries of human resources personnel	Fixed
i.	Wages of telephone order assistants	Fixed
j.	Costs of providing online support	Variable
k.	Users' guides	Variable

Variable expences:

Variable expenses are the aggregate costs that progressions with the adjustment in the level of activity.Variable expenses are specifically corresponding to the level of activity.It implies that the variable expense per unit does not change but rather the aggregate variable costs changes with the level of movement.

Fixed expenses:

Fixed expenses stay steady in aggregate sum over a particular scope of activity, these don't increment or reduction when the volume of make changes. Fixed expense per unit is contrarily relative to the level of movement.