Classify costs

 

Cromwell Furniture Company manufactures sofas for distribution to several major retail chains. The following costs are incurred in the production and sale of sofas:

a.     Fabric for sofa coverings

b.     Wood for framing the sofas

c.     Legal fees paid to attorneys in defense of the company in a patent infringement suit,

$25,000 plus $160 per  hour

d.     Salary of production supervisor

e.     Cartons used to ship sofas

f.      Rent on experimental equipment, $50 for every sofa produced

g.     Straight-line depreciation on factory equipment

h.     Rental costs of warehouse, $30,000 per month

i.       Property taxes on property, plant, and equipment

j.      Insurance premiums on property, plant,  and  equipment,  $25,000  per  year  plus $25 per $25,000 of insured value over $16,000,000

k.     Springs

l.       Consulting fee of $120,000 paid to efficiency specialists

m.   Electricity costs of $0.13 per kilowatt-hour

n.     Salesperson’s salary, $80,000 plus 4% of the selling price of each sofa sold

o.     Foam rubber for cushion fillings

p.     Janitorial supplies, $2,500 per month

q.     Employer’s FICA taxes on controller’s salary of $180,000

r.      Salary of designers

s.      Wages of sewing machine operators

t.      Sewing supplies

Instructions

Classify the preceding costs as either fixed, variable, or mixed. Use the following tabular head- ings and place an X in the appropriate column. Identify each cost by letter in the cost column.

 

Cost                                Fixed Cost                          Variable Cost                    Mixed Cost