Define and classify variable, faed,and mixed costs,E22.1 (LO 1) Bonita Company manufactures a single product. Annual production costs incurred in themanufacturing process are shown below for two levels of production.Costs IncurredProduction in Units5,00010,000TotalCost/TotalCost/Production CostsCostUnitCostUnitDirect materials$8,0009,500$1.60$16.000$1.6019,0003,300Direct labor1.901.902,0004,000Utilities0.400.33Rent0.804,0001.4000.40Maintenance8000.160.14Supervisory salaries1,0000.201,0000.10Instructionsa. Define the terms variable costs, fixed costs, and mixed costs.b. Classify cach cost above as either variable, fixed, or mixed.

Solution Concept The cost classification on the basis of behavior -variable cost…

Utilities 2,000 0.40 3,300 0.80 0.16 Rent 4,000 4,000 Maintenance 800 1,400 Supervisory salaries 1,000 0.20 1,000 Instructions a. Define the terms variable costs, fixed costs, and mixed costs. b. Classify cach cost above as either variable, fixed, or mixed.

Utilities 2,000 0.40 3,300 0.80 0.16 Rent 4,000 4,000 Maintenance 800 1,400 Supervisory salaries 1,000 0.20 1,000 Instructions a. Define the terms variable costs, fixed costs, and mixed costs. b. Classify cach cost above as either variable, fixed, or mixed.

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

Define and classify variable, faed,
and mixed costs,
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.
Costs Incurred
Production in Units
5,000
10,000
Total
Cost/
Total
Cost/
Production Costs
Cost
Unit
Cost
Unit
Direct materials
$8,000
9,500
$1.60
$16.000
$1.60
19,000
3,300
Direct labor
1.90
1.90
2,000
4,000
Utilities
0.40
0.33
Rent
0.80
4,000
1.400
0.40
Maintenance
800
0.16
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 cach cost above as either variable, fixed, or mixed.

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