The per-unit amount of three different production costs for Onini, Inc., are as follows:

Cost A Cost B Cost C
Production = 10,000 $ 20.00 $ 15.00 $ 12.00
Production = 40,000 $ 5.00 $ 11.25 $ 12.00

What type of cost are each of these three costs?

Question

The per-unit amount of three different production costs for Onini, Inc., are as follows:

Cost A	Cost B	Cost C
Production = 10,000	 $       20.00	 $       15.00	 $       12.00
Production = 40,000	 $        5.00	 $       11.25	 $       12.00

What type of cost are each of these three costs?

BlackTom AI · Accepted Answer

To classify the cost types, I will examine how the total cost changes as production quantity changes from 10,000 to 40,000 units.
Option A: Cost A is variable, Cost B is fixed, Cost C is mixed.
- If Cost A were variable, its per-unit cost would stay constant or increase with volume. However, Cost A stays at 20.00 per unit at 10,000 units and drops to 5.00 per unit at 40,000 units, indicating the total cost does not scale linearly with units and is not behaving like a typical variable cost. This makes Option A unlikely.
- Cost B described as fixed would imply total cost remains constant regardless of volume. Yet Cost B changes from 15.00 per unit at 10,000 to 11.25 per unit at 40,000, and the implied total cost increases with volume, contradicting fixed-cost behavior. Therefore this option is incorrect.
- Cost C described as mixed would mean part fixed and part variable, with per-unit cost possibly changing or the total cost not scaling perfectly linearly. Since the per-unit cost for Cost C remains 12.00 at both levels, it behaves like a purely variable cost (total cost proportional to units). This makes the labeling of Cost C as mixed inconsistent. Overall, Option A is not supported by the data.

Option B: Cost A is fixed, Cost B is variable, Cost C is mixed.
- Here, Cost A being fixed aligns with the observation that its total cost stays constant while per-unit cost falls as volume changes from 10k to 40k. However, the data show Cost A per unit drops from 20 to 5, which is consistent with a fixed total cost spreading over more units, so the fixed classification for Cost A is plausible.
- Cost B being variable would require the total cost to change proportionally with units. The total for Cost B increases from 150,000 (10k units at 15 per unit) to 450,000 (40k units at 11.25 per unit), indicating a fixed component as well as a variable component. Hence, labeling Cost B as purely variable is questionable; this option thus misclassifies Cost B.
- Cost C being mixed would imply a fixed plus variable component. Yet the per-unit cost for Cost C is constant at 12.00 regardless of quantity, which is characteristic of a purely variable cost (total cost scales with units). Therefore this option is incorrect.

Option C: Cost A is fixed, Cost B is mixed, Cost C is variable.
- Cost A fixed: as discussed, a constant total cost with changing volume supports fixed classification for Cost A.
- Cost B mixed: the data show a total cost rise from 150,000 to 450,000 as volume increases, and the variable portion can be isolated by calculating the slope (change in total cost divided by change in units). The variable portion is 10 per unit (300,000/30,000 units), leaving a fixed component of 50,000, which fits a mixed cost pattern. This aligns well with the mixed classification.
- Cost C variable: the per-unit cost remains constant at 12.00 across both production levels, so total cost scales directly with units, which is the hallmark of a variable cost. This matches the variable classification for Cost C.

Option D: Cost A is variable, Cost B is mixed, Cost C is fixed.
- Cost A variable would require its total cost to change proportionally with units. However, the total cost for Cost A remains effectively constant at the 10k level vs the 40k level when viewed through the per-unit changes (20.00 down to 5.00 per unit), which is not characteristic of a purely variable cost. This makes Cost A not variable.
- Even though Cost B is mixed, this option’s mislabeling of Cost A as variable undermines the entire classification.
- Cost C fixed would be incorrect since Cost C’s total cost increases with production (12.00 per unit at both levels yields higher total cost at 40k), so Cost C is not fixed.

Across all options, the data best fit the pattern: Cost A behaves as fixed, Cost B has both fixed and variable elements (mixed), and Cost C behaves as purely variable. The option that matches this combination is: Cost A fixed, Cost B mixed, Cost C variable.

The per-unit amount of three different production costs for Onini, Inc., are as follows: Cost A Cost B Cost C Production = 10,000 $ 20.00 $ 15.00 $ 12.00 Production = 40,000 $ 5.00 $ 11.25 $ 12.00 What type of cost are each of these three costs?

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