Define and classify variable, fixed, and mixed costs. (SO 1, 3) 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 Production Costs Total Cost Cost/Unit Total Cost Cost/Unit Direct materials $8,250 $1.65 $16,500 $1.65Direct 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.
1. Define the terms variable costs, fixed costs, and mixed costs.
2. Classify each cost above as either variable, fixed, or mixed.