W3 Assignment 1

1. PR.05-01B
2. PR.05-02B
3. PR.05-05B

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   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:

   Required:

   Classify the costs as either fixed costs, variable costs, or mixed cost.

   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 for seat cushions
   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

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