Select cost information for Seacrest Enterprises is as follows: Based on this in
ID: 2447478 • Letter: S
Question
Select cost information for Seacrest Enterprises is as follows:
Based on this information:
a.
Both direct materials and rent expense are variable costs.
b.
Utilities expense is a mixed cost and rent expense is a variable cost.
c.
Utilities expense is a mixed cost and rent expense is a fixed cost.
d.
Direct materials is a fixed cost and utilities expense is a mixed cost.
e.
Both direct materials and utilities expense are mixed costs.
1,000 units of output 5,000 units of output Total Cost/Unit Total Cost/Unit Direct materials $5,000 $5.00 $25,000 $5.00 Utilities expense $1,000 $1.00 $3,750 $0.75 Rent expense $4,000 $4.00 $4,000 $0.80Explanation / Answer
a. Rent expense / unit is not same at 1000 and 5000 units of output. Rent expense is fixed at both the levels of output. So direct material expense is variable but rent expense is Fixed cost. So statement statement is not correct.
b. Utilities expense is mixed cost and cost per per unit gradually reduces over increasing output and total utilities expense also increases over increasing output. But rent expense is not variable. So statement is not correct.
c.Utilities expense is a mixed cost and Rent expense is fixed cost. So the statement is true.
d. Utilities expense is amixed cost but Direct material is variable as per unit cost is same at different output level. So stement is not correct.
e. Utilities is a mixed cost but Direct material is not mixed cost as per unit cost is same at different output level is same. So the statement is not correct.
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