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Instructions a. Define the terms variable costs, fixed costs, and mixed costs. b. Classify each cost above as either variable, fixed, or mixed.

Instructions a. Define the terms variable costs, fixed costs, and mixed costs. b. Classify each cost above as either variable, fixed, or mixed.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 1 E22.1 E22.1 (LO 1) Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production. Define and classify variable, fixed, and mixed costs. Costs Incurred Production in Units 5,000 10,000 Production Costs Total Cost Cost/Unit Total Cost Cost/Unit Direct materials $8,000 $1.60 $16,000 $1.60 Direct labor 9,500 1.90 19,000 1.90 Utilities 2,000 0.40 3,300 0.33 Rent 4,000 0.80 4,000 0.40 Maintenance 800 0.16 1,400 0.14 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.
Transcribed Image Text:QUESTION 1 E22.1 E22.1 (LO 1) Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production. Define and classify variable, fixed, and mixed costs. Costs Incurred Production in Units 5,000 10,000 Production Costs Total Cost Cost/Unit Total Cost Cost/Unit Direct materials $8,000 $1.60 $16,000 $1.60 Direct labor 9,500 1.90 19,000 1.90 Utilities 2,000 0.40 3,300 0.33 Rent 4,000 0.80 4,000 0.40 Maintenance 800 0.16 1,400 0.14 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.
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