Question
GreenTech Innovations wants to identify the behavior of the three costs shown below. Cost information is provided for six months. Month Units Produced Cost 1
GreenTech Innovations 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 | 15,000 | $30,000 | $18,000 | $6,500 | |||
2 | 13,000 | $26,000 | $17,600 | $6,500 | |||
3 | 11,000 | $22,000 | $16,800 | $6,500 | |||
4 | 9,000 | $18,000 | $15,600 | $6,500 | |||
5 | 7,000 | $14,000 | $14,000 | $6,500 | |||
6 | 5,000 | $10,000 | $12,000 | $6,500 |
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 break-even point in units for the period.
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