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/UnitDirect materials $5,000 $5.00 $25,000 $5.00Utilities expense $1,000 $1.0 0 $3,750 $0.75Rent expense $4,000 $4.00 $4,000 $0.80Based on this information: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:

c. Utilities expense is a mixed cost and rent expense is a fixed cost.

Explanation:

Seacrest Enterprises

                                        1000 units                       5000 Units

                  Total Cost     Total Cost /Unit     Total Cost       Total Cost/Unit

Direct materials  $5,000               $5.00        $25,000          $5.00

Utilities expense  $1,000                 $1.0 0        $3,750            $0.75

Rent expense        $4,000                    $4.00         $4,000            $0.80

Direct Materials show variable Costs

Utilities expense show mixed costs

Rent Expense show fixed costs

The correct answer is

c. Utilities expense is a mixed cost and rent expense is a fixed cost.