18. Indicate whether each of the following costs of productive output is usually variable (V) or fixed (F)
a. Machine operator\'s hourly wages
b. City operating license
c. Machine helper\'s wages
d. Wiring used in radios
e. Indirect materials
f.  Property insurance
g. Gasoline for delivery truck
h. Real estate taxes
Solution
Cost Type Reason Machine operator\'s hourly wages Variable (V) It is variable because it is paid on per hour basis which is linked to the volume of production. City operating license Fixed (F) It is fixed because the license is acquired for a fixed term. It has no connection to the production. Machine helper\'s wages Variable (V) Wages are variable in nature and are linked to the volume of production. Wiring used in radios Variable (V) It is variable because its use will depend on the units of radios produced. Indirect materials Variable (V) Materials treated as variable as their requirements varies with the volume of production. Property insurance Fixed (F) It is fixed because insurance is done for a fixed period connection to the volume of production. Gasoline for delivery truck Variable (V) It is variable because it depends on the distance and frequency on which the truck is driven. Real estate taxes Fixed (F) It is fixed because taxes are not linked to the volume of production and remain constant for a particular period.
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18- Indicate whether each of the following costs of productive output.docx
1. 18. Indicate whether each of the following costs of productive output is usually variable (V) or
fixed (F)
a. Machine operator's hourly wages
b. City operating license
c. Machine helper's wages
d. Wiring used in radios
e. Indirect materials
f.  Property insurance
g. Gasoline for delivery truck
h. Real estate taxes
Solution
Cost Type Reason Machine operator's hourly wages Variable (V) It is variable because it is paid
on per hour basis which is linked to the volume of production. City operating license Fixed (F) It
is fixed because the license is acquired for a fixed term. It has no connection to the production.
Machine helper's wages Variable (V) Wages are variable in nature and are linked to the volume
of production. Wiring used in radios Variable (V) It is variable because its use will depend on the
units of radios produced. Indirect materials Variable (V) Materials treated as variable as their
requirements varies with the volume of production. Property insurance Fixed (F) It is fixed
because insurance is done for a fixed period connection to the volume of production. Gasoline
for delivery truck Variable (V) It is variable because it depends on the distance and frequency on
which the truck is driven. Real estate taxes Fixed (F) It is fixed because taxes are not linked to
the volume of production and remain constant for a particular period.
