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.)
Sales commissions = $17 × 1,000 = $17,000
2. Calculate the manufacturing cost per drum set.
| Per unit cost = Total cost / 1,000 drum sets |
