new age furniture company manufactures sofas for distribution to several major retai 647693

New Age Furniture Company manufactures sofas for distribution to several major retail chains. The following costs are incurred in the production and sale of sofas:

a. Springs

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b. Consulting fee of $25,000 paid to efficiency specialists

c. Sewing supplies

d. Electricity costs of $0.10 per kilowatt hour

e. Fabric for sofa coverings

f. Salary of production vice president

g. Salesperson’s salary, $20,000 plus 5% of the selling price of each sofa sold

h. Janitorial supplies, $15 for each sofa produced

i. Employer’s FICA taxes on controller’s salary of $150,000

j. Rent on experimental equipment, $35 for every sofa produced

k. Wood for framing the sofas

l. Insurance premiums on property, plant, and equipment, $10,000 per year plus $15 per $10,000 of insured value over $15,000,000

m. Hourly wages of sewing machine operators

n. Salary of designers

o. Property taxes on property, plant, and equipment

p. Legal fees paid to attorneys in defense of the company in a patent infringement suit, $15,000 plus $175 per hour

q. Cartons used to ship sofas

r. Rental costs of warehouse, $15,000 per month

s. Straight line depreciation on factory equipment

t. Foam rubber for cushion fillings


Classify the preceding costs as either fixed, variable, or mixed. Use the following tabular headings and place an “X” in the appropriate column. Identify each cost by letter in the Cost column.


Fixed Cost

Variable Cost

Mixed Cost

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