Mastery Problem: Contribution Margin, Cost-Volume-Profit Analysis and Break-Even Point (Overview) Fixed, Variable and Mixed Costs An appreciation of cost behavior is needed in order for management to understand and predict profitability as the costs of material, labor and other operating expenses and levels of production and sales change. It's important to review the cost behavior of fixed, variable and mixed costs before contribution margins, cost-volume-profit analysis, and break- even points. 1. In the table below, Have-A-Seat Inc. has outlined many of the costs associated with producing office chairs. With respect to the production and sale of office chairs, classify each cost as fixed, mixed, or variable. a. Pressure-molded plastic for chair frames b. Pension cost: $0.50 per employee hour on the job Variable Cost Variable Cost c. Insurance premiums for inventory: $2,100 per month plus $0.01 for each dollar of inventory over $2 million Mixed Cost d. Property taxes: $120,000 per year for the factory building and land Fixed Cost 2. Variable costs per unit stay the same increase with changes in the level of activity, while fixed costs per unit decrease as the number of units increases and as the number of units decreases. Feedback Check My Work Refer to the rollovers to fixed, variable and mixed costs for help with this part.