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Problem 1-14 through 1-19

# Problem 1-14 through 1-19 - Problem 1-14-Product cost-Mf g...

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--Product cost-- Period cost Item# VC FC DM DL Mf g O H (Selling & Admin) Oppo rtuni ty cost Sun k cost 1 Rental revenue forgone, \$30,000 per year X 2 Direct materials cost, \$80 per unit X X 3 Rental cost of warehouse, \$500 per month X X 4 Rental cost of equipment, \$4,000 per month X X 5 Direct labor cost, \$60 per unit X X 6 Depreciation of the annex space, \$8,000 per year X X X 7 Advertising cost, \$50,000 per year X X 8 Supervisor's salary, \$1,500 per month X X 9 Electricity for machines, \$1.20 per unit X X 1 0 Shipping cost, \$9 per unit X X 1 1 Return earned on investments, \$3,000 per year X Explanation 1 Opportunity cost because it is the cost of the alternate decision to use space for another purpose 2 Variable because it is a unit cost thus varies with volume of production 3 Fixed cost because it is a fixed rent amount. Period cost because the space is not used for manufacturing 4 Fixed cost because it is a fixed rent amount. Mfg OH because it is used for manufacturing 5 Variable because it is a unit cost, thus varies with volume of production 6 Fixed cost because it is a fixed amount. Sunk cost because it has been incurred 7 Fixed cost because it is a fixed amount. Period cost because the space is not used for manufacturing 8 Fixed cost because it is a fixed amount. Mfg OH because the salary is not traceable to units of production. 9 Variable because it is a unit cost, thus varies with volume of production. Mfg OH because it is manufacturing 1 0 Variable because it is a unit cost, thus varies with volume of shipping. Period cost because it is not

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Problem 1-14 through 1-19 - Problem 1-14-Product cost-Mf g...

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