Answer:
The per unit transportation costs increase as the units sold decrease.
The per unit variable component of transportation costs remains constant.
Explanation:
mixed costs are costs that share both a fixed component and a variable one, e.g. transportation costs generally are mixed because depreciation, insurance and sometimes even maintenance costs are fixed, while gasoline and drivers' wages are variable.
If total units transported decrease, then the fixed part of transportation costs will increase on a per unit basis. Even if the variable part remains stable, total costs per unit will still increase.
We can plug in some numbers:
Fixed expenses = $1,000 per month
variable costs = $2 per package
total packages sent during month 1 = 500
total costs = $1,000 + ($2 x 500) = $2,000
costs per unit = $4
if suddenly the number of packages delivered drops to 300
total costs = $1,000 + ($2 x 300) = $1,600
costs per unit = $5.33
a 40% decrease in the number of packages delivered resulted in a 33.33% increase in costs per unit delivered.
