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# Cost classification and estimating costs

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12.2
Cost classifications. For each of the following costs, check the column(s) that most likely to apply:
Cost Variable Fixed
Raw materials
Staples used to secure packed boxes of product
Plants janitor's wages
Order processing clerks' wages
Production workers' wages
Production supervisiors' salaries
Sales force commissions
Maintenance supplies used
President's salary
Electricity cost
Real estate taxes for:
Factory
Office building
12.4
Estimating costs based on behavior patterns: Tony estimates that the costs of insurance, license, and depreation to operate his car total \$580 per month and that the gas, oil, and maintenance costs were 40 cents per mile. Tony also estimates that, on average, he drives his car 1,800 miles per month.
Required:
A. How much cost would Tony expect to incur during October if he drove the car 2,256 miles?
B. Would it be meaningful for Tony to calculate an estimated average cost per mile for a typical 1,800-mile month? Explain your answer.

12.6
Understanding CVP relationships.
Calculate the missing amounts for each of the following firms:
Units selling variable costs contribution fixed operating
Sold price per unit margin costs income (loss)
Firm A 5,600 \$12.00 ? \$25,200 \$20,300 ?
Firm B 16,800 ? \$22.20 ? 84,500 \$43,180
Firm C ? 7.30 3.20 28,700 ? (13,500)
Firm D 14,160 ? 55.25 66,552 73,250 ?

#### Solution Preview

12.2
Cost classifications. For each of the following costs, check the column(s) that most likely to apply:
Cost Variable Fixed
Raw materials -Variable
Staples used to secure packed boxes of product -Variable
Plants janitor's wages -Fixed
Order processing clerks' wages- Fixed
Production workers' wages- Variable
Production supervisiors' salaries- Fixed
Sales force commissions- Variable
Maintenance supplies used- Fixed
President's salary -Fixed
Electricity cost- Semi Fixed
Real estate taxes for:
Factory- Fixed
Office building -Fixed

12.4
Estimating costs based on behavior patterns: Tony estimates that the costs of insurance, license, and depreation to operate his car total \$580 per month and that the gas, oil, and maintenance ...

#### Solution Summary

Response describes the Cost classification, estimating costs based on behavior petterns, understanding CVP relationships

\$2.49