Assignment 1 F2022
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Bill Pope has developed a new device that is so exciting he is considering quitting his job in order to
produce and market it on a large-scale basis. Bill will rent a garage for $300 per month for production
purposes. Utilities will cost $40 per month. Bill has already taken an industrial design course at the local
community college to help prepare for this venture. The course cost $300. Bill will rent production
equipment at a monthly cost of $800. He estimates the material cost per unit will be $5, and the labour
cost will be $3. He will hire workers and spend his time promoting the product. To do this he will quit his
job, which pays $3,000 per month. Advertising and promotion will cost $900 per month.
Required:
Complete the chart below by placing an "X" under each heading that helps to identify the cost involved.
There can be "Xs" placed under more than one heading for a single cost, e.g., a cost might be a sunk
cost, an overhead cost and a product cost, there would be an "X" placed under each of these headings
opposite the cost.
Variable
Cost
Fixed Cost
Manuf.
Overhead
Product Cost
Selling Cost
General rent
Cost of the industrial
design course
Equipment rented
Material cost
Labour cost
Present salary
Advertising