Fixedcostperunit the average fixed cost per unit

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Unformatted text preview: Per Unit The average fixed cost per unit varies when level of activity varies. Cost Classifications for Predicting Cost Behavior Behavior of Cost (within the relevant range) Cost In Total Per Unit Variable Total variable cost changes as activity level changes Variable cost per unit remains the same over wide ranges of activity Fixed Total fixed cost remains the same even when the activity level changes Average fixed cost per unit goes down as activity level goes up Mixed Costs: contains both variable and fixed cost The total mixed c t line c be expres ed os an s as an equation: Y = a + bX Where: Total Utility Cost Y ixe al m Tot t cos or d ble a ari miv se Activity (Kilowatt Hours) Y a b X = Total mixed cost = Fixed cost (the verical intercept of the line) = Variable cost per unit of activity (the slope of the line) =L evel of activity Variable Cost per KW X Fixed Monthly Utility Charge Mixed or Semivariable Costs – An Example Y = a + bX Y = $40 + ($0.03 × 2,000) Y = $100 A company produces toy airplanes. If 6,000 t...
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