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Listed here are the total costs associated with the 2015 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $507 each.

Listed here are the total costs associated with the 2015 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $507 each.

      Costs
1.      Plastic for casing—$22,000
2.      Wages of assembly workers—$80,000.
3.      Property taxes on factory—$5,000
4.      Accounting staff salaries—$36,000
5.      Drum stands (1,000 stands purchased)—$39,000
6.      Rent cost of equipment for sales staff—$24,000
7.      Upper management salaries—$200,000
8.      Annual flat fee for factory maintenance service—$14,000
9.      Sales commissions—$17 per unit
10.      Machinery depreciation, straight-line—$46,000

Required:
1.     Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.)

Explanation:

Sales commissions = $17 × 1,000 = $17,000
2.     Calculate the manufacturing cost per drum set.

 

Explanation:

Per unit cost = Total cost / 1,000 drum sets

The following chart shows how costs flow through a business as a product is manufactured. Some boxes in the flowchart show cost amounts.

The following chart shows how costs flow through a business as a product is manufactured. Some boxes in the flowchart show cost amounts. Compute the cost amounts for the input boxes.