Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.
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(a) The determination as to whether a
cost is variable, fixed, or mixed can be made by comparing the cost in total or
on a per-unit basis at two different levels of production.
|
Variable Costs Fixed Costs Mixed Costs |
|
Vary in total
but remain constant on a per-unit basis. Remain
constant in total but vary on a per-unit basis. Contain both a
fixed element and a variable element. Vary both in
total and on a per-unit basis. |
(b) Using these criteria as a guideline, the
classification is as follows:
|
Direct
materials Direct
labor Utilities |
|
Variable Variable Mixed |
|
Rent Maintenance Supervisory
salaries |
|
Fixed Mixed Fixed |