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Closet Links 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-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 Closet​ Link's total variable costs.

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Answer:

The Total Variable Cost is $242,200

Explanation:

The variable costs are all the prime costs which is all direct costs which includes direct labor $138,000, direct material $85,000 and packaging costs $19,200 which increases with the activity level increases. This means that the cost that doesn't change with the change in activity level are fixed costs and these are depreciation, factory insurance, Manager and supervisor's salary, and property taxes which are fixed for the year.

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