Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 6, Problem 1PB
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:
Fabric for sofa coverings
Wood for framing the sofas
Legal fees paid to attorneys in defense of the company in a patent infringement suit, $25,000 plus $160 per hour
Salary of production supervisor
Cartons used to ship sofas
Rent on experimental equipment, $50 for every sofa produced
Straight-line depreciation on factory equipment
Rental costs of warehouse, $30,000 per month
Property taxes on property, plant, and equipment
Insurance premiums on property, plant, and equipment, $25,000 per year plus $25 per $25,000 of insured value over $16,000,000
Springs for seat cushions
Consulting fee of $120,000 paid to efficiency specialists
Electricity costs of $0.13 per kilowatt-hour
Salesperson’s salary, $80,000 plus 4% of the selling price of each sofa sold
Foam rubber for cushion fillings
Janitorial supplies, $2,500 per month
Employer's FICA taxes on controller's salary of $180,000
Salary of designers
Wages of sewing machine operators
Sewing supplies
Instructions
Classify the preceding costs as either 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.
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Classify costs
Cromwell Furniture Company manufactures sofas distribution to several major retail chains.The folowing costs are incurred in the production and sale of sofas:
Fabric for sofa coverings
Wood for framing the sofas
Legal fee paid to attorneys in defence of the company in a patent infringement suit.$25,000 plus $160 oer hour.
salary of production supervisor
cartons used to ship sofas
Rent on experimental equipment,$50 for every sofa produced
straight-line depreciation on factory equipment
Rental costs of warehouses,$30,000 per month
Prpperty taxes on property,plant and equipment
Insurance premiums on property, plant, and equipment, $25,000 per year plus $25 per $25,000 of insured value over $16,000,000
Springs for seat cushions
consulting fee of $120,000 paid to efficiency specialists
Electricity costs of $0.13 per kilowatt-hour
Salesperson's salary,$80,000 plus 4% of the selling price of each sofa sold
Foam rubber for cushion fillings
Janitorial supplies,$2,500 per month…
Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year:
Cost Items Appearing on the Income Statement
Materials cost ($10 per unit)
Company president's salary
Depreciation on manufacturing equipment
Salaries of administrative personnel
Labor cost ($4 per unit)
Advertising costs (150,000 per year)
Shipping and handling ($500 per year)
Research and development costs
Real estate taxes on factory
Inspection costs
Easton can currently purchase the scooters it makes from Weston Company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. If Easton outsources the scooters to Weston,
which of the following costs would be relevant to the outsourcing decision?
Multiple Choice
X
Materials cost
Shipping and handling
Inspection costs
All of these answers are correct.
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:
Fabric for sofa coverings
Wood for framing the sofas
Legal fees paid to attorneys in defense of the company in a patent infringement suit, $25,000 plus $160 per hour
Salary of production supervisor
Cartons used to ship sofas
Rent on experimental equipment, $50 for every sofa produced
Straight-line depreciation on factory equipment
Rental costs of warehouse, $30,000 per month
Property taxes on property, plant, and equipment
Insurance premiums on property, plant, and equipment, $25,000 per year plus $25 per $25,000 of insured value over $16,000,000
Springs for seat cushions
Consulting fee of $120,000 paid to efficiency specialists
Electricity costs of $0.13 per kilowatt-hour
Salesperson’s salary, $80,000 plus 4% of the selling price of each sofa sold
Foam rubber for cushion fillings
Janitorial supplies, $2,500…
Chapter 6 Solutions
Managerial Accounting
Ch. 6 - Describe how total variable costs and unit...Ch. 6 - Which of the following costs would be classified...Ch. 6 - Describe how total fixed costs and unit fixed...Ch. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - What does operating leverage measure, and how is...
Ch. 6 - High-low method The manufacturing costs of...Ch. 6 - Contribution margin Waite Company sells 250,000...Ch. 6 - Prob. 3BECh. 6 - Prob. 4BECh. 6 - Prob. 5BECh. 6 - Operating leverage Haywood Co. reports the...Ch. 6 - Margin of safety Jorgensen Company has sales of...Ch. 6 - Classify Costs Following is a list of various...Ch. 6 - Identify cost graphs The following cost graphs...Ch. 6 - Identify activity bases For a major university,...Ch. 6 - Prob. 4ECh. 6 - Identify fixed and variable costs Intuit Inc....Ch. 6 - Relevant range and fixed and variable costs Child...Ch. 6 - High-low method Ziegler Inc. has decided to use...Ch. 6 - Prob. 8ECh. 6 - Contribution margin ratio Young Company budgets...Ch. 6 - Contribution margin and contribution margin ratio...Ch. 6 - Prob. 11ECh. 6 - Break-even sales Anheuser-Busch InBev SA/NV (BUD)...Ch. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Break-even analysis for a service company3 Sprint...Ch. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Prob. 22ECh. 6 - Prob. 23ECh. 6 - Prob. 24ECh. 6 - Prob. 25ECh. 6 - Classify costs Seymour Clothing Co. manufactures a...Ch. 6 - Break-even sales under present and proposed...Ch. 6 - Prob. 3PACh. 6 - Prob. 4PACh. 6 - Prob. 5PACh. 6 - Contribution margin, break-even sales,...Ch. 6 - Classify costs Cromwell Furniture Company...Ch. 6 - Prob. 2PBCh. 6 - Prob. 3PBCh. 6 - Prob. 4PBCh. 6 - Prob. 5PBCh. 6 - Contribution margin, break-even sales,...Ch. 6 - Analyze Global Airs cost-volume-profit...Ch. 6 - Prob. 2MADCh. 6 - Prob. 3MADCh. 6 - Prob. 4MADCh. 6 - Prob. 1TIFCh. 6 - Prob. 3TIFCh. 6 - Profitability strategies Somerset Inc. has...Ch. 6 - Prob. 5TIFCh. 6 - Analysis of costs for a shipping department Sales...Ch. 6 - Taylor Corporation is analyzing the cost behavior...Ch. 6 - Prob. 2CMACh. 6 - Bolger and Co. manufactures large gaskets for the...Ch. 6 - Prob. 4CMA
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