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Homework answers / question archive / costs
costs. Costs that are constant in total and vary per unit based on the level of activity changes are called a. mixed bi variable c. fixed d. opportunity
Which of the following is not an example of a cost that varies in total as the number of units produced changes? a. Direct materials cost b. Wages of assembly worker Oc Electricity per KWH to operate factory equipment d. Supervisor salary
(1) The Answer is (c) Fixed.
Explanation : Fixed cost are the cost that do not change with the level of activity and remain constant in totality. as the production level increases or decreases the fixed cost charged per unit will decrease or increase respectively.
For Example Fixed Manuacturing Cost are $ 100 and the unit produced are 100 Units it means fixed cost per Units = $ 100 / 100 = $ 1 per Unit. However if Units produced increased to 125 Unit then per Unit fixed cost will be $ 100 / 125 Units = $ 0.80 per Unit.
(2) The Answer is (d) Supervisor Salary.
Explanation : Supervisor are paid monthly a fixed amount there these are fixed cost in nature and does not change with the level of prodution.
