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    Classifying Manufacturing Costs As Fixed or Variable

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    Which of the following costs of productive output are usually variable or fixed?

    1. Packing materials for stereo components
    2. Real estate taxes
    3. Gasoline for a delivery truck
    4. Property Insurance
    5. Depreciation expense of buildings (calculated with the straight line method)
    6. Supplies
    7. Indirect materials
    8. Bottles used to package liquids
    9. License fees for company cars
    10. Wiring used in radios
    11. Machine helper's wages
    12. Wood used in bookcases
    13. City operating license
    14. Machine depreciation based on machine hours used
    15. Machine operator's hourly wages
    16. Cost of required outside inspection of each unit produced

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    Solution Preview

    Remembering that fixed costs remain the same over the relevant range regardless of the level of activity and that variable costs change over the relevant range based upon the level of activity, here are my responses:

    1. Packing materials for stereo components: ...

    Solution Summary

    Given a long list of common production-related costs, this solution classifies each as fixed or variable.