Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.

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

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Costs Incurred Production in Units 5,000 10,000 Total Cost Unit $1.60 1.90 0.40 0.80 0.16 0.20 Total Cost Production Costs Direct materials Direct labor Utilities Rent Maintenance Supervisory salaries $8,000 9,500 2,000 4,000 800 1,000 $16,000 19,000 3,300 4,000 1,400 1,000 Cost/ Unit $1.60 1.90 0.33 0.40 0.14 0.10