Question

The mixing department incurred the following costs during the month:

A. Direct materials.
B. Direct labor.
C. Manufacturing overhead.
D. Total production costs.

Answer 1

Variable costs, such as labor and raw materials, increase or decrease with output in the mixing department.

Step-by-step explanation:

Variable costs are the costs of the variable inputs (e.g., labor). The only way to increase or decrease output is by increasing or decreasing the variable inputs. Therefore, variable costs increase or decrease with output. We treat labor as a variable cost, since producing a greater quantity of a good or service typically requires more workers or more work hours. Variable costs would also include raw materials.