BRIEF EXERCISES ollous BES-1 Monthly production costs in Dilts Company for two l

Question

BRIEF EXERCISES ollous BES-1 Monthly production costs in Dilts Company for two levels of production are as Clas S. Cost 2,000 Units 4,000 Units to Indirect labor Supervisory salaries Maintenance $10,000 5,000 4,000 $20,000 5,000 6,000 Indicate which costs are variable, fixed, and mixed, and give the reason for each answer BE5.2 For Lodes Compa of each cost within the relevant range assuming the behavior is linear ny, the relevant range of production is 40-80% of capacity. At /40% of capacity, a variable cost is $4,000 and a fixed cost is $6,000. Diagram, the behavior

Explanation / Answer

Fixed cost: these costs remains same, regardless the production .

Variable cost:

It varies proportionately with changes in produaction.

Indirect labour : variable cost, it varies proportionately with production.

Supervisory salaries: fixed, it remains same

Maintenance: fixed, not increase proportionately with production. Some times it increase in totals but not proportionately.

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