Question

A tool company uses just-in-time production on its assembly lines to manufacture tools. When producing tools,...

A tool company uses just-in-time production on its assembly lines to manufacture tools. When producing tools, many costs are incurred, and one of these is the steel used in the tools. What type of cost is this?

Question 10 options:

Mixed cost

Step cost

Fixed cost

Variable cost
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Homework Answers

Answer #1
10 Answer is
Variable cost
Variable costs are the costs that change with the volume of production
Steels used in producing tools are directly related to the volume of tools produced.Hence, it is a variable cost.
Fixed costs are the costs that does not change with volume of output and it remains fixed.So steel used are not fixed cost
Mixed costs includes both fixed and variable costs.So, steel used are not mixed cost
Step costs remains fixed for a given level of output and changes when it crosses a particular volume.Then it remain fixed upto a certain level of volume.So, steel used are not fixed cost.
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