Question

Which of the following is the correct statement about fixed costs? The fixed cost per unit will decrease when volume increases. The fixed cost per unit will decrease when volume decreases. The fixed cost per unit will increase when volume increases. The fixed cost per unit does not change when volume changes.

Answer 1

Answer:

The correct statement is: "The fixed cost per unit will decrease when volume increases."

Explanation:

Total fixed costs remain the same within a relevant range, but the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units produced.