Fixed costs per acre are given as $150 and variable costs per acre as $250. What percentage of total cost per acre is fixed?

Fixed costs per acre are given as $150 and variable costs per acre as $250. What percentage of total cost per acre is fixed?

• A. 37.5%
• B. 50%
• C. 25%
• D. 60%

Answer: (A)

The main point is to compare the fixed portion to the total cost per acre. Total cost per acre is fixed plus variable: 150 + 250 = 400. The fixed portion of that total is 150 out of 400, which is 150/400 = 0.375, or 37.5%. So, 37.5% of the total cost per acre is fixed. The other percentages would require different fixed or total amounts (e.g., 50% would need fixed to be 200 with a total of 400), so they don’t fit these numbers.

The main point is to compare the fixed portion to the total cost per acre. Total cost per acre is fixed plus variable: 150 + 250 = 400. The fixed portion of that total is 150 out of 400, which is 150/400 = 0.375, or 37.5%.

So, 37.5% of the total cost per acre is fixed. The other percentages would require different fixed or total amounts (e.g., 50% would need fixed to be 200 with a total of 400), so they don’t fit these numbers.