Question

Select cost information for seacrest enterprises is as follows: 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 $0.80 based on this information: select one:



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.

Answer 1

Answer:

Not sure but I think is B. again not sure

Explanation:

Answer 2

Answer:

C) utilities expense is a mixed cost and rent expense is a fixed cost.

Explanation:

                         1,000 units of output           5,000 units of output

                         direct materials                    direct materials

                         $5,000     $5.00                   $25,000      $5.00

                        utilities expense                    utilities expense

                         $1,000       $1.00                    $3,750        $0.75

                         rent expense                          rent expense

                         $4,000       $4.00                  $4,000        $0.80

Utilities expense is a mixed expense since it has a fixed amount + a variable amount, that is why average utilities expenses cost per unit decreases only a little as the number of units produced increase. For 1,000 units the utilities expense = $1,000, while as the units increase, the utilities expense increases to $3,750, but the average cost per unit decreases from $1 to$0.75.

Rent expense is a fixed cost, since it is equal to $4,000 no matter how many units are produced.