Question:
Fixed versus variable cost behavior
Thompson Company's cost and production data for two recent months included the following.
|
January
|
February
|
|
Production (units)
|
90
|
230
|
|
Rent
|
$1,500
|
$1,500
|
|
Utilities
|
$ 450
|
$1,150
|
Required
a. Separately calculate the rental cost per unit and the utilities cost per unit for both January and February.
b. Identify which cost is variable and which is fixed. Explain your answer.