A company's packaging cost is strictly variable within the relevant range. At 20,000 units, total packaging cost is $50,000. Production falls by 20% next month.

Which statement is correct?

Question

A company's packaging cost is strictly variable within the relevant range. At 20,000 units, total packaging cost is $50,000. Production falls by 20% next month.

Which statement is correct?

Accepted Answer

Total packaging cost falls to $40,000, while packaging cost per unit remains $2.50.

Answer

Total packaging cost falls by $10,000, so packaging cost per unit is $2.00.

Answer

Total packaging cost falls to $40,000, and packaging cost per unit falls by 20%.

Answer

Total packaging cost remains $50,000, while packaging cost per unit rises.

Crowdly

A company's packaging cost is strictly variable within the relevant range. At 20...

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