Kohler Manufacturing typically achieves one of three production levels in any given year: 8 million pounds of steel,10 million pounds of steel,or 16 million pounds of steel.In tracking some of its costs,Kohler's controller discovered one cost that was $10 per pound no matter what the production level for the year.This is an example of a
A) variable cost.
B) fixed cost.
C) semivariable cost.
D) semifixed cost.

Question

Quizplus · Accepted Answer

Variable costs change in total in direct proportion to changes in activity level. Since the cost per pound remains constant at $10 regardless of the production level, it is a variable cost.

Kohler Manufacturing Typically Achieves One of Three Production Levels in Any