Chapter 1 - Problem 1-16A 1 Variable Fixed Cost Cost X X X...

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Problem 1-16A   1. Period Product Cost (Selling  and Oppor- Variabl e Fixed Direct  Direct  Mfg. Admin.) tunity  Sunk Name of the Cost Cost Cost Materials Labor Overhead Cost Cost Cost Yuko’s present salary, $3,000  per month ............................... X X Loft rent, $400 per month .......... X X Seeds, earth, pots and  fertilizer, $7 per tree ............... X X Wages of gardener, $12 per  hour ........................................ X X Advertising, $550 per month ..... X X Sales commission, $8 per trees X X Rent of production equipment,  $250 per month ...................... X X Legal and filing fees, $300 ........ X X X Rent of sales office, $200 per  month ..................................... X X Phone for taking orders, $30  per month ............................... X X
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Interest lost on savings  account, $3,000 per year ....... X X 2. The $300 cost of incorporating the business is not a differential cost. Even though the cost was  incurred to start the business, it is a sunk cost. Whether Yuko produces bonsai trees or stays in her  present job, she will have incurred this cost.
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Problem 1-21A   1.
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