Fowler Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.
|
Costs Incurred |
||||
|
Production in Units |
5,000 |
10,000 |
||
|
Total Cost |
Cost Unit |
Total Costs |
Cost Unit |
|
|
Direct materials |
8,250 |
1.65 |
16,500 |
1.65 |
|
Direct labor |
9,400 |
1.88 |
18,800 |
1.88 |
|
Utilities |
1,400 |
0.28 |
2,300 |
0.23 |
|
Rent |
4,000 |
0.80 |
4,000 |
0.40 |
|
Maintenance |
800 |
0.16 |
1,200 |
0.12 |
|
Supervisory salaries |
1,000 |
0.20 |
1,000 |
0.10 |
Instructions
(a) Define the terms variable costs, fixed costs, and mixed costs.
(b) Classify each cost above as either variable, fixed, or mixed.