1) a fixed cost will not change because you make or sell one more
unit within a relevant range, it does not mean it will never change
2) a variable cost will cause you to use more/pay more every time you
make one more unit.
3) Whether or not a cost is mixed depends on how you pay
for the cost. If you pay a set amount and then pay more if you use
more than it is mixed. You will see with the answers that some
can be mixed.

Juffy, Inc. manufactures peanut butter and incurs costs for the following items.
Decide if the cost is a fixed cost (F), a variable cost (V), or a mixed cost (M).

       V 1. Plastic jar 
  F / M 2. Cell phone for sales people 
       V 3. Corn syrup, an ingredient 
       V 4. Worker who operates the cooking machine 
       V 5. Peanuts, an ingredient 
 V / M 6. Utilities at the manufacturing plant 
       F 7. Insurance on the manufacturing plant 
       F 8. Janitors working at corporate headquarters 
       F 9. Telephone at corporate headquarters 
       F 10. Supervisor at the manufacturing plant 
       V 11. Worker who puts the peanuts in the machine 
       V 12. Worker who fills the jars with peanut butter 
       F 13. Depreciation on the machine that cooks the peanut butter 
       F 14. Plant manager’s salary 
       V 15. Quality inspectors of the product 
 V / M 16. Salesmen travel expenses 
  F / M 17. Oil and parts for the manufacturing machines 
       V 18. Lids for the jars 
       V 19. Shipping to customers 
       F 20. Advertising the peanut butter 
       F 21. Rent at the corporate headquarters 

1., 3., 5, 18, are materials that go directly into the product (direct materials). When you make more product you must buy/use more. Therefore the costs are
variable costs. The more you make the more it costs you.

4, 11, 12, 15, are costs incurred because you pay workers to make the product. The more products you make the more it costs you. Therefore, these costs
are variable costs.

6. and 16. These costs could be variable or mixed. This is determined by how
the costs are paid for, which is not stated. See the description above.

2. and 17. These costs could be fixed or mixed. This is determined by how the
company plans to pay for the costs. If there is a set amount to be paid
every month it is fixed, if it varies by units made or sold, they are variable
costs.

19 Shipping to customers is a variable cost because the more you sell
the more you have to ship and it costs you more each time you ship.

All others are fixed – The company will pay the same set amount and this
will not change based on how many units are made or sold.

General Rules to follow, things to notice:

1. Direct materials and direct labor are always variable costs
2. Manufacturing overhead is almost always a fixed cost.(except utilities)
3. Costs that are paid monthly/annually are almost always fixed costs.