Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

Exercise 4

Identifying Variable Costs, Committed Fixed Costs, and Discretionary Fixed Costs
Required:
Classify each of the following costs for a jeans manufacturing company as a variable cost, committed fixed cost, or discretionary fixed cost.
a. The cost of buttons
b. The cost to lease warehouse space for completed jeans-the lease contract runs for 2 years at $5,000 per year
c. The salary of a summer intern
d. The cost of landscaping and mowing the grass-the contract with a local mowing company runs from month to month
e. Advertising in a national magazine for teenage girls
f. Electricity to run the sewing machines
g. Oil and spare needles for the sewing machines
h. Quality training for employees-typically given for four hours at a time, every six months
i. Food and beverages for the company Fourth of July picnic
j. Natural gas to heat the factory during the winter