Question

First Buy Television Antenna Company provided the following manufacturing costs for the month of June.

Direct labor cost $132,000
Direct materials cost 84,000
Equipment depreciation (straight-line) 24,000
Factory insurance 10,000
Factory manager's salary 10,200
Janitor's salary 4,000
Packaging costs 18,600
Property taxes 16,000
From the above information, calculate First Buy's total fixed costs.
A) $298,800
B) $40,200
C) $60,200
D) $64,200

Answer 1

First Buy Television Antenna Company's total fixed costs for June are $64,200, after adding together equipment depreciation, insurance, manager's salary, janitor's salary, and property taxes, giving us option D as the correct answer. The correct option is D) $64,200.

Step-by-step explanation:

To calculate First Buy Television Antenna Company's total fixed costs for June, we need to identify which expenses are fixed. Fixed costs are those that do not change with the level of production. These include equipment depreciation, insurance, the manager's salary, the janitor's salary, and property taxes. Direct labor, direct materials, and packaging costs are variable costs, as they change with production levels.

The fixed costs provided are:

• Equipment depreciation: $24,000
• Factory insurance: $10,000
• Factory manager's salary: $10,200
• Janitor's salary: $4,000
• Property taxes: $16,000

Adding these amounts together, we get:

$24,000 + $10,000 + $10,200 + $4,000 + $16,000 = $64,200.

Therefore, the total fixed costs for First Buy's Television Antenna Company for June are $64,200, which corresponds to option D.