Use the same transaction data for Magnificent Modems, Inc., as was used in Chapter 1 (see page 52).

Required

a. Based on these data, identify each cost incurred by the company as (1) fixed versus variable relative to the number of units produced and sold; and (2) product versus selling, general, and administrative (S,G,&A). The solution for the first item is shown as an example.

.:.

b. Replace the question marks in the following table to indicate the product cost per unit assuming levels of production of 5,000, 6,000, 7,000, and 8,000.

Cost Item Depreciation on manufacturing equipment Direct materials Direct labor Production supplies Rent on manufacturing facility Sales commissions Depreciation on administrative equipment Administrative costs (rent and salaries) Fixed Variable Product S,G,&A