Question

Fixed cost per unit increases when
A) variable cost per unit decreases B) production volume decreases C) variable cost per unit increases D) production volume increases

Answer 1

Answer:

Fixed cost per unit increases when production volume decreases. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.

Answer 2

Answer:

D) Production volume increases.

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