Taran Company incurred the following costs for the months of January and Februar
ID: 2328066 • Letter: T
Question
Taran Company incurred the following costs for the months of January and February.
Type of Cost
January
February
Insurance
$ 5,000
$ 5,000
Utilities
4,000
5,000
Depreciation
3,500
3,500
Materials
10,000
20,000
From the information above we can assume that
output decreased from January to February.
insurance is a mixed cost.
output stayed the same from January to February.
insurance and depreciation are fixed costs
Type of Cost
January
February
Insurance
$ 5,000
$ 5,000
Utilities
4,000
5,000
Depreciation
3,500
3,500
Materials
10,000
20,000
Explanation / Answer
Total fixed costs and variable cost per unit do not change with change in units.On the other hand mixed cost is a combination of fixed and variable costs.
Hence insurance and depreciation are fixed costs that do not change with change in outputs.Output tends to increase from January to February as well.
Hence the correct option is D.
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