Question

Closet Links Clothing Company provided the following manufacturing costs for the month of June. Direct labor cost $ 130,000 Direct materials cost 86,000 Equipment depreciation ​(straightminus​line) 23,000 Factory insurance 15,000 Factory​ manager's salary 12,600 ​Janitor's salary 3,000 Packaging costs 19,600 Property taxes 16,000 From the above​ information, calculate Closet​ Link's total variable costs.

Answer 1

To calculate Closet Link's total variable costs, we sum the direct labor cost ($130,000), direct materials cost ($86,000), and packaging costs ($19,600), which equals $235,600.

Step-by-step explanation:

To calculate Closet Link's total variable costs for the month of June, we need to identify which costs listed vary with production and which are fixed. Fixed costs do not change with the level of production, such as the equipment depreciation, factory insurance, factory manager's salary, and property taxes. In contrast, variable costs are those that fluctuate with the level of production, such as direct labor cost, direct materials cost, and packaging costs. Let's proceed with the calculation:

Direct Labor Cost: $130,000

Direct Materials Cost: $86,000

Packaging Costs: $19,600

Adding these variable costs together:

$130,000 (Direct Labor) + $86,000 (Direct Materials) + $19,600 (Packaging Costs) = $235,600

Hence, the total variable costs for Closet Links Clothing Company for the month of June are $235,600.

Answer 2

$235,600

Step-by-step explanation:

Variable costs refer to corporate expenses that change in proportion with the output of a production process. These costs may either increase or decrease based on a company's production volume; they rise as production increases and fall as production decreases. In our case, they include direct material cost, direct labor cost, and packaging cost.

Closet​ Link's total variable costs

= Direct material cost + Direct labor cost + packaging cost

= $86,000 + $130,000 + $19,600

= $235,600