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Unformatted text preview: E5-1 (a) Define the terms Variable costs are the costs of doing business such as cost of goods, shipping, handling and storage, sales commissions, etc., which are directly related to the sales of goods or services. Fixed costs are the costs of doing business such as rent, utilities, depreciation, taxes, etc., that remain generally the same regardless of the amount of sales of goods or services. Mixed costs are costs with both fixed and variable elements. (b) Classify each cost above as either variable, fixed, or mixed. Direct materials Variable costs Direct labor Variable costs Utilities - Mixed Rent - Fixed Maintenance - Mixed Supervisory salaries - Fixed ...
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- Spring '08