Acc349 Managerial Accounting: E5-1 Fowler Company manufactures a single product

Acc349 Managerial Accounting

E5-1

Fowler Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.

Costs Incurred

Production in Units 5,000 10,000

Total Cost Cost Unit Total Costs Cost Unit

Direct materials 8,250 1.65 16,500 1.65

Direct labor 9,400 1.88 18,800 1.88

Utilities 1,400 0.28 2,300 0.23

Rent 4,000 0.80 4,000 0.40

Maintenance 800 0.16 1,200 0.12

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.
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