Kilgore Company makes and sells a single product. Kilgore incurred the following costs in its...

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Accounting

Kilgore Company makes and sells a single product. Kilgore incurred the following costs in its most recent fiscal year:

Cost Items Appearing on the Income Statement

Materials cost ($7 per unit) Sales commissions (2% of sales)

Company presidents salary Salaries of administrative personnel

Depreciation on manufacturing equipment Shipping and handling ($0.50 per unit)

Customer billing costs (1% of sales) Depreciation on office furniture

Rental cost of manufacturing facility Manufacturing supplies ($0.25 per unit)

Advertising costs ($200,000 per year) Production supervisors salary

Labor cost ($8 per unit)

Kilgore could purchase the products that it currently makes. If it purchased the items, the company would continue to sell them using its own logo, advertising program, and sales staff.

Cost Items Appearing on the Income Statement
Materials cost ($7 per unit)	Sales commissions (2% of sales)
Company presidents salary	Salaries of administrative personnel
Depreciation on manufacturing equipment	Shipping and handling ($0.50 per unit)
Customer billing costs (1% of sales)	Depreciation on office furniture
Rental cost of manufacturing facility	Manufacturing supplies ($0.25 per unit)
Advertising costs ($200,000 per year)	Production supervisors salary
Labor cost ($8 per unit)

Required

Identify each cost as relevant or irrelevant to the outsourcing decision and indicate whether the cost is fixed or variable relative to the number of products manufactured and sold.

Required Identify each cost as relevant or irrelevant to the outsourcing decision and indicate wi number of products manufactured and sold

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