Product Unit Cost Types

What are the different cost types with respect to product units?

a) Fixed
b) Variable
c) Mixed

What is the best description for each of the cost types?

Answer:

Fixed costs are constant regardless of production, variable costs vary directly with production, and mixed costs have both fixed and variable components.

There are three categories of costs with respect to product units: fixed costs, variable costs, and mixed costs. Fixed costs do not change with the level of production and remain constant regardless of the number of units produced, like rent or salaries. Variable costs vary directly with the level of production, such as materials and labor used in the manufacturing process. Mixed costs contain elements of both fixed and variable costs; they will increase with production but also include a fixed component that does not change with production levels.

Costs measured on a per-unit basis include average cost, average variable cost, and marginal cost. Average cost is the total cost divided by the number of goods produced. Average variable cost is the variable cost divided by the quantity of output, and marginal cost is the additional cost of producing one more unit of product.

Production technology refers to the combination of resources and processes that a business uses to produce goods or services.