The following chart shows three different costs: Cost A, Cost B, and Cost C. For each cost,
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Question:
The following chart shows three different costs: Cost A, Cost B, and Cost C. For each cost, the chart shows the total cost and cost per unit at two different volumes within the same relevant range. Based on this information, identify each cost as fixed, variable, or mixed. Explain your answers.
At 5,000 units | At 6,000 units | |||
Total Cost | Cost per Unit | Total Cost | Cost per Unit | |
Cost A | $30,000 | $6.00 | $36,000 | $6.00 |
Cost B | $30,000 | $6.00 | $30,000 | $5.00 |
Cost C | $30,000 | $6.00 | $33,000 | $5.50 |
1) Cost A is a ____________________ (fixed cost, mixed cost or variable cost)
2) Total costs ____________________ (decrease, increase, or stay the same)
3) and the per unit costs _________ (remain constant or are not constant) as the volume increases.
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