Question

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 minus −​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.

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

Answer 1

D. ​$242,200

Step-by-step explanation:

The variable cost is that cost which is changes when there is a change in the level of production.

It includes the direct material cost, direct labor cost, factory supplies, etc

The computation of the total variable cost is shown below:

= Direct material cost + direct labor cost + packaging cost

= $85,000 + $138,000 + $19,200

= $242,200

Therefore we included these three cost for the calculation of the variable cost