18-20

18. The line on the graph below represents which type of cost? $1,000 Total Costs 2,400 Units Produced A) Fixed Cost B) Variable Cost C) Mixed Cost D) Stair Step Cost E) None of the above 19. Which of the following statements is true regarding variable costing? A. It is a traditional costing approach. B. It is not acceptable by GAAP. C. It is not permitted to be used for managerial reporting. D. It treats overhead in the same manner as absorption costing. E. It makes it easier to manipulate earnings with changes in production levels. Use the following information for questions 20-21 Under absorption costing, a company had the following unit costs when 8,000 units were produced. Direct labor $8.50 per unit Direct material $9.00 per unit Variable overhead $6.75 per unit Fixed overhead ($60,000/8,000 units) $7.50 per unit Total production cost $31.75 per unit 20. Compute the total production cost per unit under absorption costing if 30,000 units had been produced. A. $31.75 B. $26.25 C. $27.25 D. $24.25 E. $17.50