Cost Behavior and Cost-Volume-Profit AnalysisWarren / Reeve / DuchacProblem 19-1A solution |
West Coast Apparel Co. manufactures a variety of clothing types for distribution to several major retail chains. The following costs are incurred in the production and sale of blue jeans. Identify each cost listed below as variable costs, fixed costs, or mixed cost.
a. Salary of production vice president: Fixed
b. Property taxes on property, plant, and equipment: Fixed
c. Electricity costs of $0.12 per kilowatt-hour: Variable
d. Salesperson's salary, $30,000 plus 2% of the total sales: Mixed
e. Consulting fee of $100,000 paid to industry specialist for marketing advice: Fixed
f. Shipping boxes used to ship orders: Variable
g. Dye: Variable
h. Thread: Variable
i. Salary of designers: Fixed
j. Brass buttons: Variable
k. Janitorial supplies, $2,000 per month: Fixed
l. Legal fees paid to attorneys in defense of the company in a patent infringement suit, $40,000 plus $150 per hour: Mixed
m. Straight-line depreciation on sewing machines: Fixed
n. Insurance premiums on property, plant, and equipment, $50,000 per year plus $4 per $20,000 of insured value over $10,000,000: Mixed
o. Hourly wages of machine operators: Variable
p. Fabric: Variable
q. Rental costs of warehouse, $4,000 per month plus $3 per square foot of storage used: Mixed
r. Rent on experimental equipment, $40,000 per year: Fixed
s. Leather for patches identifying the brand on individual pieces of apparel: Variable
t. Supplies: Variable
