Chapter 14, Problem 2E

To determine

Fixed Cost:

Fixed cost is the cost that remains the same or constant throughout a particular period and does not vary over time. For example, Rent paid for a building, administration fees.

Variable Cost:

Variable cost is that cost that varies over a period of time depending upon the quantity produced. For example, raw material and labor.

Direct cost:

Direct costs are the cost that are directly associated or related with the production and manufacturing activities of a business. For example, Depreciation.

Indirect Cost:

Indirect costs are the costs that are not directly associated with production activities of a business such as advertisements.

To Classify: Each cost as fixed or variable and direct or indirect cost.