Dye Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.
Costs Incurred
5,000
10,000
Production in Units
Total
Cost/
Total
Cost/
Production Costs
Cost
Unit
Cost
Unit
Direct materials
$8,250
$1.65
$16,500
$1.65
Direct labor
9,500
1.90
19,000
1.90
Utilities
1,500
0.30
2,500
0.25
Rent
4,000
0.80
4,000
0.40
Maintenance
800
0.16
1,100
0.11
Supervisory salaries
1,000
0.20
1,000
0.10
Instructions
(a) Define the terms variable costs, fixed costs, and mixed costs.
(b) Classify each cost above as either variable, fixed, or mixed.