Problem
Sorter Company has provided the following data for the third quarter of the most recent year:
Sales $500,000
Fixed Manufacturing Overhead 55,000
Direct Labour 72,500
Fixed Selling Expenses 46,250
Variable Manufacturing Overhead 41,000
Variable Administrative Expenses 48,000
Direct Materials 51,500
Fixed Administrative Expenses 44,500
Variable Selling Expenses 49,750
Assume that direct labour is a variable cost and that there was no beginning or ending inventories.
Which items of Sorter Company's expenses and/or costs can be misleading if reported on a per unit of production and/or sales basis?