Week 4 individual - E5-1 Fowler Company manufactures a...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Fowler Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production. Production Units 5,000 5,000 10,000 10,000 Classify Production Costs Total Cost Unit Cost Total Cost Unit Cost Direct Materials 8,250 1.65 16,500 1.65 Variable cost Direct Labor 9,400 1.88 18,800 1.88 Variable Cost Utilities 1,400 0.28 2,300 0.23 Mixed Cost Rent 4,000 0.80 4,000 0.40 Fixed Cost Maintenance 800 0.16 1,200 0.12 Mixed Cost Supervisory Salaries 1,000 0.20 1,000 0.10 Fixed Cost Instructions (a) Define the terms variable costs : A cost of labor , material or overhead that changes according to the change in the volume of production units . Combined with fixed costs , variable costs make up the total cost of production. While the total variable cost changes with increased production, the total fixed costs stays the same. Fixed costs: A cost that remains constant, regardless of any change in a company's activity. Mixed costs: the behavior of costs and expenses. Mixed costs consist of a fixed component and a variable component. The annual expense of operating an automobile is a mixed cost. (b)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/17/2011 for the course ACCOUNTING 490 taught by Professor Santos during the Spring '11 term at University of Phoenix.

Page1 / 5

Week 4 individual - E5-1 Fowler Company manufactures a...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online