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MKT 100 Study Guide - Fixed Cost, Variable Cost, Party Supplies


Department
Marketing
Course Code
MKT 100
Professor
Paul Finlayson

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Worksheet: Metric 1 Expense Types
1)The Comfy Chair Company makes reclining chairs at its plant and
sells them exclusively through its own retail store. It has the following
expenses:
Plant rent and taxes = $12,000.00
Office and management expenses = $220,000.00
Machinery and equipment purchased = $100,000.00
Direct materials = $27.00/chair
Direct labour = 4 hours/chair @ $14.00/hour
Transportation = $5.00/chair
Commercial store front unit purchase = $500,000.00
Advertising costs = $100,000.00
Sales staff wages before commissions = $250,000.00
Commission = $12.00/chair
(a)Identify the Comfy Chair Companys variable costs.
(b)What is the total cost to produce and sell each reclining chair?
(c)Identify the Comfy Chair Companys fixed costs.
(d)What are the total fixed costs?
(e)Identify the one-time fixed costs incurred by the Comfy Chair
Company.
(f)What are the total one-time fixed costs?
Answer:
(a)Direct materials = $27.00/chair
Direct labour = 4 hours/chair @ $14.00/hour
Transportation = $5.00/chair
Commission = $12.00/chair
(b)$100.00/chair
(c)Plant rent and taxes = $12,000.00
Office and management expenses = $220,000.00
Advertising costs = $100,000.00
Sales staff wages = $250,000.00
(d)$582,000.00
(e)Machinery and equipment purchased = $100,000.00
Commercial store front unit = $500,000.00
(f)$600,000.00
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