Use the information below to answer the following question(s).Big Island Coffee Co.produced and sold 120,000 units last year.Per unit revenue and costs were as follows:
Fixed manufacturing overhead and administrative salaries are fixed costs.The per unit amounts are based on last year's production.
-Variable costs
A)are always indirect costs.
B)increase in total when the actual level of activity increases.
C)include most personnel costs and depreciation on machinery.
D)can always be traced directly to the cost object.
E)change in relation to selling price.

Question

Use the information below to answer the following question(s).Big Island Coffee Co.produced and sold 120,000 units last year.Per unit revenue and costs were as follows:
  Fixed manufacturing overhead and administrative salaries are fixed costs.The per unit amounts are based on last year's production.
-Variable costs
A)are always indirect costs. 
B)increase in total when the actual level of activity increases. 
C)include most personnel costs and depreciation on machinery. 
D)can always be traced directly to the cost object. 
E)change in relation to selling price.

Quizplus · Accepted Answer

Variable costs increase in total when the actual level of activity increases. This means that as the company produces more units, the variable costs will also increase in proportion. Examples of variable costs include direct materials, direct labor, and variable manufacturing overhead costs.

Use the Information Below to Answer the Following Question(s)