Cost Analysis
Solve Problems 1 and 2 based on the information in the following scenario.
Conglomco Corporation manufactures and sells widgets for $400 per unit. The total cost of production for 1,200 widgets is given below.
Problem 1. Differentiate each cost as being either variable or fixed and either product or period.
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Costs
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Cost by Behavior ($)
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Cost by Function ($)
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Variable
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Fixed
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Product
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Period
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Plastic for casing: $12,000.
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Wages/assembly: $55,000.
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Facility property taxes: $5,000.
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Accounting staff salaries: $40,000.
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40,000.
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40,000.
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Stands (1,200 outsourced): $22,000.
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Rental equipment/sales staff: $6,000.
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Salaries/management: $150,000.
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Annual maintenance fee: $12,000.
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Commissions: $12 per unit.
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Depreciation/machinery: $12,000.
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Continue to Problem 2.
Problem 2. Compute the manufacturing cost per widget.
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Cost to Manufacture Each Widget (for year ended December 31, 2012)
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Item
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Total Cost ($)
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Cost per Unit ($)
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Variable manufacturing costs:
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Fixed manufacturing costs:
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Total manufacturing cost:
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