Fixed Costs: The fixed costs refer to those costs, which do remain constant with respect to the output. The fixed costs do not vary with the output. The expenses like the depreciation , taxes, and interest expenses come under the fixed costs. Variable Costs: The variable costs refer to the costs which vary with respect to the output. The variable costs include the commission, the freight charges, and the direct materials. Mixed Costs: The mixed costs are those costs, which have both the features of the variable cost and the fixed cost. Some examples of mixed costs are a bonus to employees, parking fees and some type of depreciation. To explain: (a) The definition of variable costs, fixed costs and mixed costs and (b) the classification of the costs.

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Chapter 22, Problem 22.1E

To determine

Fixed Costs: The fixed costs refer to those costs, which do remain constant with respect to the output. The fixed costs do not vary with the output. The expenses like the depreciation, taxes, and interest expenses come under the fixed costs.

Variable Costs: The variable costs refer to the costs which vary with respect to the output. The variable costs include the commission, the freight charges, and the direct materials.

Mixed Costs: The mixed costs are those costs, which have both the features of the variable cost and the fixed cost. Some examples of mixed costs are a bonus to employees, parking fees and some type of depreciation.

To explain: (a) The definition of variable costs, fixed costs and mixed costs and (b) the classification of the costs.

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