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BrightWave Solutions wants to identify the behavior of the three costs shown below. Cost information is provided for six months. Month Units Produced Cost 1

BrightWave Solutions wants to identify the behavior of the three costs shown below. Cost information is provided for six months.

Month

Units Produced

Cost 1 Total Costs

Cost 1 Costs per Unit

Cost 2 Total Costs

Cost 2 Costs per Unit

Cost 3 Total Costs

Cost 3 Costs per Unit

1

21,000

$42,000


$22,000


$7,000


2

19,000

$38,000


$21,600


$7,000


3

17,000

$34,000


$20,800


$7,000


4

15,000

$30,000


$19,600


$7,000


5

13,000

$26,000


$18,000


$7,000


6

11,000

$22,000


$16,000


$7,000


Required:

a. Calculate the cost per unit (rounded to the nearest cent), and then identify how the cost behaves (fixed, variable, or mixed) for each of the three costs. Explain the reasoning behind your answers.

b. Calculate the contribution margin per unit and the contribution margin ratio.

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