ACCT 314

1.
Direct Indirect Fixed Variable

Assembly line labor wages X X

Plant manager's wages X X
Depreciation on the assembly line equipment X X
Component parts for the product X X
Wages of security personnel for the factory X X

2.
a. Variable cost = ($2,865,600 – $2,188,800) / (42,000 – 30,000) = $56.40
Fixed cost = $2,865,600 – $56.40 x 42,000 = $496,800
Cost function is y = $496,800 + $56.40X
b. Output level of 36,000 units = $496,800 + $56.40 x 36,000 = $2,527,200 total cost

3.
A decision made has its own ups and downs. Decisions were made based on
information that was available at the time of evaluating and making the decision. Since she
used to visit the place often for her vacation, she should have known about the occupancy
level of the hotel and should have known on the area's climatic conditions and its
implications. However, a downturn in the market is unpredictable. She should have made an
alternative plan in the event of an economic downturn. Thus, it is a case of misfortune and
carelessness in evaluating the project completely.

4.
Cost classification
Fixed Variable Mixed
Oil to lubricate the machines X
Salary of the plant manager X
Annual subscription to a trade journal X
Vacation pay for salaried production X
employees
Packaging materials X
Research and development X
Raw materials X
Material handling costs X
Marketing department costs X
Factory maintenance X