Question

Co. X classifies the total trasportation cost paid to delivery goods as a mixed cost with respect to units sold. Still in relevent range.
Which of the following is true about transportation costs?
A	Total transportation costs decrease porpotionally to the decrease of units sold
B	The per unit variable component of transportation cost remains constant
C	The per unit tansportation costs decrease porportionately to the decrease of units sold
D	The per unit tansportation costs increase as the units sold decrease
E	Total costs increase

Answer 1

As transportation cost is classified as mixed cost, it means it comprises of variable cost and fixed cost.

We know, variable cost changes in the same proportion as the production changes, therefore, per unit variable cost remains same.

Fixed cost doesn't vary with change in production, therefore, per unit fixed cost decreases as production rises and vice versa.

Therefore, in my opinion, the answer would be:

The per unit variable component of transportation cost remains constant