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3 December, 17:11

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

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Answers (1)
  1. 3 December, 19:05
    0
    Option (b) is correct.

    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.
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