Question

A soft drink bottler incurred the following factory utility cost: $3,911 for 850 cases bottled and $3,966 for 1,000 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to:

Answer 1

Answer:

$0.37

Explanation:

The computation of the variable factory utility cost per case is as follows:

Variable factory utility cost is

= Change in cost ÷  change in units

= ($3,966 - $3,911) ÷ (1,000 cases - 85 cases)

= $0.37

Hence, the variable utility cost per case would be determined by dividing the change in cost from the change in units so that the per case would be correct