Classify Costs: Variable, Fixed, and Mixed Costs in Producing

Problem Set: Module 4 Classify Costs Following is a list of various costs incurred in producing replacement automobile parts. With respect to the production and sale of these auto parts, classify each cost as either variable costs, fixed costs, or mixed costs. 1. Oil used in manufacturing equipment Variable 2. Plastic Variable 3. Property taxes, $165,000 per year on factory building and equipment Fixed 4. Salary of plant manager Fixed 5. Cost of labor for hourly workers Variable 6. Packaging Variable 7. Factory cleaning costs, $6,000 per month Fixed B. Metal Variable 9. Rent on warehouse, $10,000 per month plus $25 per square foot of storage used Mixed 10. Property insurance premiums, $3,600 per month plus $0.01 for each dollar of property over $1,200,000 Mixed V 11. Straight-line depreciation on the production equipment Fixed V 12. Hourly wages of machine operators Variable V 13. Electricity costs, $0.20 per kilowatt-hour Variable V 14. Computer chip (purchased from a vendor) Variable 15. Pension cost, $1.00 per employee hour on the job Variable