Refer to St. John's Company. Assume that output was 5,000 units in March and 10,000 units in April, utility cost is a mixed cost, and the fixed cost of utilities was $3,000. What was the variable rate per unit of output for utilities cost?
A) $0.20
B) $0.30
C) $0.40
D) $0.60

Question

Quizplus · Accepted Answer

To find the variable rate per unit, we need to determine the total variable cost for each month and divide by the number of units. Assuming the total utility cost for March and April is known, subtract the fixed cost ($3,000) from each month's total utility cost to find the variable cost, then divide by the number of units for each month. The difference in total utility costs divided by the difference in units produced gives the variable rate per unit.