Labor Costs: Variable vs. Stepped Classification

Steps:

• Machinists increase directly with demand, making their costs variable as output rises.
• Supervisors are added only every eight machinists, creating discrete jumps in their costs.
• Total labor costs thus include continuously variable machinist expenses and incrementally increasing supervisor expenses.
• Options describe the nature of each cost type, with "stepped" fitting supervisors' discontinuous changes.

Why D is correct:

• Stepped costs rise in fixed increments tied to output thresholds, per cost accounting definitions, matching one supervisor per eight machinists.

Why the others are wrong:

• A: Supervisors vary in steps, not fixed at a constant level.
• B: Machinists vary with demand; supervisors are not fixed but stepped.
• C: Supervisors are stepped (discrete), not continuously variable like machinists.

Final answer: D