North Shore Clothing Company provided the following manufacturing costs for the month of June. Direct labor cost $138,000 Direct materials cost 85,000 Equipment depreciation (straight-line) 24,000 Factory insurance 19,000 Factory manager's salary 11,000 Janitor's salary 3,000 Packaging costs 19,200 Property taxes 14,000 From the above information, calculate North Shore's total variable costs.

Question

Business

Buckeye

31 March, 15:48

North Shore Clothing Company provided the following manufacturing costs for the month of June. Direct labor cost $138,000 Direct materials cost 85,000 Equipment depreciation (straight-line) 24,000 Factory insurance 19,000 Factory manager's salary 11,000 Janitor's salary 3,000 Packaging costs 19,200 Property taxes 14,000 From the above information, calculate North Shore's total variable costs.

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Answers (1)

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Betty Boop · Answer 1

The multiple choices are as follows:

A. $313,200 B. $223,000 C. $71,000 D. $242,200

The correct option is D,$242,200

Explanation:

Variable costs are costs that vary with the level of output such as the direct labor cost, direct material costs including the packaging costs since the more the output produced the more packaging materials that would be required.

Total variable costs=direct labor cost+direct material cost+packaging costs

direct labor cost is $138,000

direct material cost is $85,000

packaging cost is $19,200

total variable cost=$138,000+$85,000+$19,200=$242,200.

depreciation, factory insurance as well as the salaries are fixed costs.