High School

Toledo Toy Company incurred the following costs during 20x4. The company sold all of its products manufactured during the year.

**Direct Materials:** ₱ 5,000,000
**Direct Labor:** ₱ 3,500,000
**Manufacturing Overhead:**
- Utilities (primarily electricity): ₱ 250,000
- Depreciation Plant and Equipment: ₱ 350,000
- Insurance: ₱ 260,000
- Supervisory Salary: ₱ 470,000
- Property Taxes: ₱ 330,000

**Selling Cost:**
- Advertising: ₱ 315,000
- Sales Commission: ₱ 145,000

**Administrative Costs:**
- Salaries of Top Management: ₱ 580,000
- Office Supplies (fixed): ₱ 70,000
- Depreciation on Building and Equipment: ₱ 140,000

During 20x4, the company operated at about half of its capacity due to a slowdown in the economy. Prospects for 20x5 are slightly better. Jared Lowes, the marketing manager, forecasts a 30 percent growth in sales over the 20x4 level.

How much is the TOTAL FIXED COST of Toledo Toy Company in 20x4?

A. ₱2,515,000
B. ₱2,445,000
C. ₱2,375,000
D. ₱2,500,000

Answer :

Toledo Toy Company's overall constant expenses in 20x4 amounted to ₱1,620,000, together with depreciation, insurance, salaries, property taxes, and office substances.

To calculate the TOTAL FIXED COST of Toledo Toy Company in 20x4, we need to add up all of the fixed fees incurred through the 12 months. Fixed prices are those that do not range with the level of manufacturing or income.

Fixed Costs in 20x4:

Depreciation on Plant and Equipment: ₱350,000

Insurance: ₱260,000

Supervisory Salary: ₱470,000

Property Taxes: ₱330,000

Office Supplies (fixed): ₱70,000

Depreciation on Building and Equipment: ₱140,000

Total Fixed Costs = ₱350,000 + ₱260,000 + ₱470,000 + ₱330,000 + ₱70,000 + ₱140,000 = ₱1,620,000

So, the TOTAL FIXED COST of Toledo Toy Company in 20x4 is ₱1,620,000.

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