St. John's Company incurred the following costs for the months of March and April.
$\begin{array}{lrr}\text { Type of Cost } &\text { March }&\text { April }\
\text { Insurance } & \$ 5,000 & \$ 5,000 \
\text { Utilities } & 4,000 & 5,000 \
\text { Depreciation } & 3,500 & 3,500 \
\text { Materials } & 10,000 & 20,000
\end{array}$
-Refer to the Figure.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

St. John's Company incurred the following costs for the months of March and April.
 $\begin{array}{lrr}\text { Type of Cost } &\text { March }&\text { April }\
\text { Insurance } & \$ 5,000 & \$ 5,000 \
\text { Utilities } & 4,000 & 5,000 \
\text { Depreciation } & 3,500 & 3,500 \
\text { Materials } & 10,000 & 20,000
\end{array}$
-Refer to the Figure.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

Quizplus · Accepted Answer

The variable portion of the utilities cost is the total cost minus the fixed cost. For March, the variable cost is $4,000 - $3,000 = $1,000. For April, it is $5,000 - $3,000 = $2,000. The variable rate per unit is $1,000 / 5,000 units = $0.20.

St John's Company Incurred the Following Costs for the Months