Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.
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(a) The determination as to whether a
cost is variable, fixed, or mixed can be made by comparing the cost in total or
on a per-unit basis at two different levels of production.
Variable Costs
Fixed Costs
Mixed Costs
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Vary in total
but remain constant on a per-unit basis.
Remain
constant in total but vary on a per-unit basis.
Contain both a
fixed element and a variable element.
Vary both in
total and on a per-unit basis.
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(b) Using these criteria as a guideline, the
classification is as follows:
Direct
materials
Direct
labor
Utilities
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Variable
Variable
Mixed
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Rent
Maintenance
Supervisory
salaries
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Fixed
Mixed
Fixed
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