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 rent 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 rent expense are mixed costs.

Quizplus · Accepted Answer

The cost information given indicates that there are two cost components, direct materials and rent expense. Direct materials is given as a variable cost, which means that it changes in proportion to the level of production. Rent expense is given as a fixed cost, which means that it remains constant regardless of the level of production. Therefore, the correct answer is D – direct materials is a variable cost and rent expense is a fixed cost.

Select Cost Information for Klondike Corporation Is as Follows