Bonita ASA 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, or mixed.

Transcribed Image Text:

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