A soft drink bottler incurred the following factory utility cost: $9,246 for 5,200 cases bottled and $8,997 for 4,900 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:
A) $1.81
B) $1.78
C) $1.84
D) $0.83

Question

Quizplus · Accepted Answer

The variable cost per case can be calculated using the formula: (Cost at higher activity level - Cost at lower activity level) / (Higher activity level - Lower activity level). So, ($9,246 - $8,997) / (5,200 - 4,900) = $0.83 per case.

A Soft Drink Bottler Incurred the Following Factory Utility Cost