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The following information is available for electricity costs for the last six months of the year: Month Production Volume Ele
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Answer #1

Variable cost = Change in Total cost / Change in Units

We will compare data of May and June for the formula

Change in total cost = 4,050 - 2,400 = $1,650

Change in quantity = 2,100 - 1,200 = 900 units

Variable cost per unit = 1,650/900 = $1.83

In the month of June total cost is $4,050

Variable cost = 2,100*1.83 = 3,850

Fixed cost = Total cost - Variable cost

= 4,050 - 3,850

= $200

Therefore the correct option is 2nd.

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