Problem - Classify Costs
Mystique Apparel Co. manufactures a variety of clothing types for distribution to several major retail chains. The following costs are incurred in the production and sale of blue jeans:
a.) Brass buttons
b.) Consulting fee of $250,000 paid to industry specialist for marketing advice
c.) Dye
d.) Fabric
e.) Electricity costs of $0.05 per kilowatt-hour
f.) Hourly wages of machine operators
g.) Insurance premiums on property, plant, and equipment, $85,000 per year plus $6 per $50,000 of insured value over $15,000,000
h.) Janitorial supplies, $3,500 per month
i.) Leather for patches identifying the brand on individual pieces of apparel
j.) Legal fees paid to attorneys in defense of the company in a patent infringement suit, $50,000 plus $500 per hour
k.) Property taxes on property, plant, and equipment
l.) Rental costs of warehouse, $7,000 per month plus $2 per square foot of storage used
m.) Rent on experimental equipment, $18,000 per year
n.) Salary of designers
o.) Salary of production vice president
p.) Salesperson's salary, $45,000 plus 3% of the total sales
q.) Shipping boxes used to ship orders
r.) Straight-Line depreciation on sewing machines
s.) Supplies
t.) Thread
Instructions - Classify the preceding costs as either fixed, variale, or mixed. Use the following tabular headings and place an "X" in the appropriate column. Identify each cost by letter in the cost column.