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How do you find the variable cost per bill mailed under the current paper-based system?

Question:

How do you find the variable cost per bill mailed under the current paper-based system?

Costs:

Costs are classified as the variable cost, fixed cost, and mixed cost based on the change in the amount with respect to the change in the activity level. Fixed costs remain the same and it does not change with the change in the activity level. The variable cost changes directly proportional to the change in the activity level. Mixed cost consists of variable cost and fixed cost, both.

Answer and Explanation:

The variable cost per bill mailed under the paper-based system would be computed as follows: -

(1) The cost of paper and other supplies consumed for mailing bills.

(2) Postage expense per mail.


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Variable Costing: Method, Formula & Advantages

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