Hooper Business Machines provided the following manufacturing costs for the month of March. $$\begin{array} { | l | r | }
\hline \text { Direct labor cost } & \$ 140,000 \
\hline \text { Direct materials cost } & 85,000 \
\hline \text { Equipment depreciation (straight-line) } & 28,000 \
\hline \text { Factory insurance } & 21,000 \
\hline \text { Factory manager's salary } & 13,000 \
\hline \text { Janitor's salary } & 5,100 \
\hline \text { Packaging costs } & 18,800 \
\hline \text { Property taxes } & 16,300 \
\hline
\end{array}$$ From the above information,calculate Hooper's total fixed costs.
A) $327,200
B) $57,300
C) $76,100
D) $83,400

Question

Hooper Business Machines provided the following manufacturing costs for the month of March. $$\begin{array} { | l | r | } 
\hline \text { Direct labor cost } & \$ 140,000 \
\hline \text { Direct materials cost } & 85,000 \
\hline \text { Equipment depreciation (straight-line) } & 28,000 \
\hline \text { Factory insurance } & 21,000 \
\hline \text { Factory manager's salary } & 13,000 \
\hline \text { Janitor's salary } & 5,100 \
\hline \text { Packaging costs } & 18,800 \
\hline \text { Property taxes } & 16,300 \
\hline
\end{array}$$ From the above information,calculate Hooper's total fixed costs.
A) $327,200
B) $57,300
C) $76,100
D) $83,400

Quizplus · Accepted Answer

Fixed costs are those that do not change with the level of production or sales, and include equipment depreciation, factory insurance, factory manager's salary, and property taxes, totaling $28,000 + $21,000 + $13,000 + $16,300 = $78,300. However, the correct calculation should be $28,000 (Equipment depreciation) + $21,000 (Factory insurance) + $13,000 (Factory manager's salary) + $5,100 (Janitor's salary) + $16,300 (Property taxes) = $83,400. The inclusion of the janitor's salary as a fixed cost was overlooked in the initial response. Fixed costs remain constant regardless of the company's level of production, which includes salaries of permanent employees like janitors, making the correct total fixed costs $83,400.

Hooper Business Machines Provided the Following Manufacturing Costs for the Month