Question

Toledo Toy Company incurred the following costs during 20x4. The company sold all of its products manufactured during the year.
Direct material.......................................................... $4,500,000
Direct labor................................................................ 3,300,000
Manufacturing overhead:
Utilities (primarily electricity)................................... 210,000
Depreciation on plant and equipment....................... 345,000
Insurance................................................................... 240,000
Supervisory salaries................................................... 450,000
Property taxes........................................................... 315,000
Selling costs:
Advertising.............................................................. 292,500
Sales commissions.................................................... 135,000
Administrative costs:
Salaries of top management and staff....................... 558,000
Office supplies.......................................................... 60,000
Depreciation on building and equipment................. 120,000
During 20x4, the company operated at about half of its capacity, due to a slowdown in the economy. Prospects for 20x5 are slightly better. Jared Lowes, the marketing manager, forecasts a 30 percent growth in sales over the 20x4 level.

Required:
Categorize each of the costs listed above as to whether it is most likely variable or fixed.
Forecast the 20x5 cost amount for each of the cost items listed above.



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  • CreatedApril 22, 2014
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