Chabu's Managerial Accountant, Yi-Fan, Is Classifying the Company's Costs According

question 145

Essay

Chabu's managerial accountant, Yi-Fan, is classifying the company's costs according to their behaviour to prepare next year's budget. Therefore, the cost object is the entire company. Chabu produces and sells aluminum beverage cans, such as those used for soft drinks. You may find the following facts about Chabu's operation useful in responding to this problem:
-Production machines must be cleaned monthly, regardless of the amount of use.
-The more cans produced, the more lubrication is needed.
-Chabu's monthly production and sales volume is usually at least 1,000 cans, but can be as much as 5,000 cans depending on demand.
-Material handling costs include depreciation on equipment and fuel for loaders.
-Cans are packaged into 100-unit groups prior to sale.
-Research and development costs vary between $10,000 and $10,500 per month
-The factory maintenance costs vary between $6,000 and $6,500 monthly.
-Chabu's staff level is constant at 25 people, who are all paid salaries.
-Raw materials are purchased based on expected production levels.
-Sales commissions (based on a per-case amount)are included in marketing department costs.
Yi-Fan has classified the costs into three categories: fixed, variable, and mixed.
Place an X in the appropriate column of the table below to indicate the most likely behaviour of each cost:

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Definitions:

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