Question

A soft drink bottler incurred the following factory utility cost: $3,636 for 650 cases bottled and $3,724 for 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)$5.59

b)$0.35

c)$4.14

d)$4.04

Answer 1

Option (b) is correct.

Step-by-step explanation:

Given that,

factory utility cost:

$3,636 for 650 cases bottled, and

$3,724 for 900 cases bottled.

Variable factory utility cost:

= Change in cost ÷ change in units

= (3,724 - 3,636) ÷ (900 - 650)

= 88 ÷ 250

= $0.352

Therefore, the variable factory utility cost per case bottled is closest to $0.352.