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1. On October 1, 2019, Santana Rey, launched a computer services company, Business Solutions, that is organized as a corporation and provides consulting services, computer system installations, and custom program development.

Santana decides to diversify her business by also manufacturing computer workstation furniture.

Classify the following manufacturing costs of Business Solutions as either (a) variable (V) or fixed (F), and (b) direct (D) or indirect (I).

Manufacturing Costs	a. Variable or Fixed	b. Direct or Indirect
1. Monthly flat fee to clean workshop
2. Laminate coverings for desktops
3. Taxes on assembly workshop
4. Glue to assemble workstation component parts
5. Wages of desk assembler
6. Electricity for workshop
7. Depreciation on manufacturing tools

2. Classifying costs can help managers evaluate their product and make planning and control decisions.

Explain how classifying your costs as Variable or Fixed can help a manager make the following determinations:

a) How many units must we sell to break even? (Minimum 40 words)

b) What will profit be if we lower selling price? (Minimum 40 words)

c) Should we add a new line of business? (Minimum 40 words)

Explain how classifying costs as Product or Period can help a manager make the following determinations:

d) What is the cost of our inventory? (Minimum 40 words)

e) Are selling expenses too high? (Minimum 40 words)

3. Selected costs related to Apples iPhone are listed below. Classify each cost as either direct materials (DM), direct labor (DL), factory overhead (FO), selling expenses (S), or general and administrative (GA) expenses.

1. Display screen
2. Assembly-line supervisor salary
3. Wages for assembly workers
4. Salary of the chief executive officer
5. Glue to hold the iPhone cases together
6. Uniforms provided for each factory worker
7. Wages for retail store worker
8. Depreciation (straight-line) on robotic equipment used in assembly

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