Question

Place an X under product, variable, fixed, and mixed costs when appropriate.

If a cost is a period cost, indicate if it is Selling with S or Administrative with A. Under Per Unit Variable cost and Total Fixed Cost, place the corresponding dollar amount.

Answer 1

Table showing type of costs for the given data (Amounts in $)

Operating Cost Items	Sales Levels		Cost Type					Cost Type Amounts
	4,000	6,000	Product Cost	Period Cost	Variable	Fixed	Mixed	Per Unit Variable Cost	Total Fixed Cost
Dough	1,600	2,400	X		X			0.40
Toppings	1,000	1,500	X		X			0.25
Cheese	1,800	2,700	X		X			0.45
Tomatoes	1,200	1,800	X		X			0.30
Energy	2,500	3,000	X				X	0.25 [(3,000-2,500)/(6,000-4,000)]	1,500
Kitchen Personnel	3,000	3,000	X			X			3,000
Delivery Personnel	880	1,320		S	X			0.22
Car expenses	2,600	2,900		A			X	0.15 [(2,900-2,600)/(6,000-4,000)]	2,000 [2,900 - (0.15*6,000)]
Facilities	10,000	10,000		A		X			10,000
Advertising	4,500	4,500		S		X			4,500
Total Operating Costs	29,080	33,120						2.02	21,000

Therefore total variable cost is $2.02 per unit and total fixed cost is $21,000.

Working Notes:-

1)Variable cost is the cost which remain same per unit and change in proportion to change in units. Fixed cost is the cost which remain same irrespective of change in units. Mixed cost comprises of both variable cost and fixed cost.

2) Energy and car expenses are mixed costs and variable cost and fixed cost is separated from the given mixed cost.

Variable cost per unit from mixed cost = (Increase in mixed cost for increase in units)/Total increase in units

For example for Energy = ($3,000-$2,500)/(6,000 units - 4,000 units)

= $500/2,000 units = $0.25 per unit

Total fixed energy cost = $3,000 - ($0.25*6,000 units)

= $3,000 - $1,500 = $1,500