Applewhite Corporation, a manufacturing company, is analyzing its cost structure in a project to achieve some cost savings. Which of the following statements is/are correct?

I. The cost of the direct materials in Applewhites products is considered a variable cost.

II. The cost of the depreciation of Applewhites plant machinery is considered a variable cost because Applewhite uses an accelerated depreciation method for both book and income tax purposes. EA 2-4

III. The cost of electricity for Applewhites manufacturing facility is considered a fixed variable, even if the cost of the electricity has both variable and fixed components.

1. I, II, and III are correct.

2. I only correct.

3. II and III only are correct.

4. None of the listed choices is correct.