Asked by Rocio Lopez on Apr 26, 2024
Verified
Fixed costs per unit decrease as activity levels increase.
Fixed Costs
Expenses that do not change with the level of production or sales, including rent, salaries, and insurance premiums, providing predictability to budgeting.
Activity Levels
Various measures of operational intensity or volume of work done by a company, used in budgeting and cost management.
- Understand the influence of cost behavior on decision-making across different organizational tiers.
Verified Answer
KB
Kelsey BigelowApr 28, 2024
Final Answer :
True
Explanation :
Fixed costs remain constant regardless of activity levels, so fixed costs per unit will decrease as activity levels increase. This is because the fixed costs are spread over a larger number of units, thus reducing the per unit cost.
Learning Objectives
- Understand the influence of cost behavior on decision-making across different organizational tiers.
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