E5.1 (LO 1), C Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown here for two levels of production. Production in Units Production Costs Direct materials Direct labor Utilities Rent Maintenance Supervisory salaries 5,000 Total Cost $8,000 9.500 2,000 4,000 800 1,000 Instructions a. Define the terms variable costs, fixed costs, and mixed costs. b. Classify each cost above as either variable, fixed, or mixed. Costs Incurred Unit Cost $1.60 1.90 0.40 0.80 0.16 0.20 10,000 Total Cost $16,000 19,000 3,300 4,000 1,400 1,000 Unit Cost $1.60 1.90 0.33 0.40 0.14 0.10

E5.1 (LO 1), C Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown here for two levels of production. Production in Units Production Costs Direct materials Direct labor Utilities Rent Maintenance Supervisory salaries 5,000 Total Cost $8,000 9.500 2,000 4,000 800 1,000 Instructions a. Define the terms variable costs, fixed costs, and mixed costs. b. Classify each cost above as either variable, fixed, or mixed. Costs Incurred Unit Cost $1.60 1.90 0.40 0.80 0.16 0.20 10,000 Total Cost $16,000 19,000 3,300 4,000 1,400 1,000 Unit Cost $1.60 1.90 0.33 0.40 0.14 0.10

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter19: Variable Costing (varcost)

Section: Chapter Questions

Problem 4R: To determine the effect of different levels of production on the company’s income, move to cell B7...

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To determine the effect of different levels of production on the company’s income, move to cell B7 (Actual production). Change the number in B7 to the different production levels given in the table below. The first level, 100,000, is the current level. What happens to the operating income on both statements as production levels change? Enter the operating incomes in the following table. Does the level of production affect income under either costing method? Explain your findings.
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