Select cost information for Klondike Corporation is as follows: Based on this information:
A)Both direct materials and rent expense are variable costs.
B)Direct materials is a fixed cost and rent expense is a variable cost.
C)Both direct materials and rent expense are fixed costs.
D)Direct materials is a variable cost and rent expense is a fixed cost.
E)Both direct materials and utilities expense are mixed costs.

Question

Select cost information for Klondike Corporation is as follows:  Based on this information:
A)Both direct materials and rent expense are variable costs. 
B)Direct materials is a fixed cost and rent expense is a variable cost. 
C)Both direct materials and rent expense are fixed costs. 
D)Direct materials is a variable cost and rent expense is a fixed cost. 
E)Both direct materials and utilities expense are mixed costs.

Quizplus · Accepted Answer

The cost information suggests that direct materials cost varies with the level of production while rent expense remains constant regardless of the level of output. Therefore, direct materials cost is a variable cost, and rent expense is a fixed cost.

Select Cost Information for Klondike Corporation Is as Follows