Why should any distinction be recognized between fixed and variable costs?

1. (1) What is meant by fixed overhead costs?
(2) What is meant by variable overhead costs ?
(3) How will increases in production affect the variable and the fixed overhead in the cost per unit? \
(4) Why should any distinction be recognized between fixed and variable costs?

2. Classify the following costs as fixed, variable, or semi-variable. Explain the reasons for your classification of the semi-variable costs.
(a) Depreciation—straight-line method (f) Rent
(b) Direct materials (g) Repairs to machinery
(c) Factory insurance (h) Social security taxes
(d) Heat, light, and power (i) Superintendence
(e) Indirect labor (j) Washroom supplies

3. Under which subheadings of the elements of cost should the following costs be classified ?
(a) Cutting tools (f) Inspector's salary
(b) Depreciation of factory (g) Legal expenses
(c) Earnings of machinist (h) Lubricating oil
(d) Foreman's wages (i) Salary of factory stores clerk
(e) Maintenance parts for factory (j) Wages of factory crane operator equipment

4. Classify the following items as direct or indirect materials:
(a) Quench oil in heat treating.
(b) Copper band on an 8-inch artillery shell.
(c) Ailerons on an airplane.
(d) 1-oz. perfume bottle.
(e) Sanding material in furniture making.
(f) Bags in flour mills.
(g) Ingots used by a foundry for making castings.