Question: Cromwell Furniture Company manufactures sofas for
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 fixed, variable, or mixed. Use the following tabular headings and place an X in the appropriate column. Identify each cost by letter in the cost column.
Transcribed Image Text:
Cost Fixed Cost Varlable Cost Mixed Cost
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