Question

Exercise 11-5 Fixed versus variable cost behavior LO 11-1

Rundle Company’s cost and production data for two recent months included the following:

	March			April
Production (units)		200			400
Rent	$	2,000		$	2,000
Utilities	$	800		$	1,600

Required

1. Separately calculate the rental cost per unit and the utilities cost per unit for both March and April.

2. Identify which cost is variable and which is fixed.

• Required A

Separately calculate the rental cost per unit and the utilities cost per unit for both March and April. (Round your answers to 2 decimal place

	March	April
Rent cost per unit
Utility cost per unit

• Required B

Identify which cost is variable and which is fixed.

Rent cost
Utility cost

Answer 1

	March	April
Production (units)	200	400
Rent	2,000	2,000
Utilities	800	1,600
Per unit Cost = Total Cost/Number of units
	March	April
Rent cost per unit	10	5
Utility cost per unit	4	4
Variable cost per unit remains constant while fixed cost in total remains constant
Hence,
Rent Cost is a fixed cost while utilities cost is variable