Delivery costs for Fast Delivery appears below for two months of operation. How should the delivery costs be classified?
A) Variable cost
B) Fixed cost
C) Mixed cost
D) More information is needed to determine answer.

Question

Delivery costs for Fast Delivery appears below for two months of operation. How should the delivery costs be classified? 
A) Variable cost 
B) Fixed cost 
C) Mixed cost 
D) More information is needed to determine answer.

Quizplus · Accepted Answer

May cost per unit = $4,608 ÷ 960 = $4.80 and June cost per unit = $5,130 ÷ 1,140 = $4.50. If the cost was to be a variable cost, the unit cost amount would have to be the same at both levels, which it is not. Also, for the cost to be a fixed cost, the total delivery cost would have to be the same at both levels, which it is not. The cost does increase with the increase in the number of packages delivered, and the unit cost changes with the activity level, thus, the cost is a mixed cost, since both the per unit cost changes and the total cost changes.

Delivery Costs for Fast Delivery Appears Below for Two Months