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 provided indicates that the cost of direct materials varies with changes in production levels, indicating that it is a variable cost. On the other hand, the rent expense is likely to remain constant even if production levels vary, suggesting that it is a fixed cost. Therefore, the best choice would be that direct materials are a variable cost and rent expense is a fixed cost (D).

Select Cost Information for Klondike Corporation Is as Follows