Asked by karleigh rivas on Jun 04, 2024
Verified
When the level of activity decreases within the relevant range, the fixed cost per unit will:
A) decrease.
B) increase.
C) remain the same.
D) The effect cannot be predicted.
Fixed Cost Per Unit
The fixed costs of production (expenses that do not change with the level of output) divided by the number of units produced.
Relevant Range
The range of activity or volume over which the assumptions about variable and fixed costs are valid for budgeting and planning purposes.
- Assess the consequences of alterations in activity levels on the cost per unit and the total expense across different cost classifications.
Verified Answer
EG
Efren GarciaJun 10, 2024
Final Answer :
B
Explanation :
When the level of activity decreases within the relevant range, the fixed cost per unit will increase because the same amount of fixed costs will be spread over a smaller number of units, resulting in a higher cost per unit.
Learning Objectives
- Assess the consequences of alterations in activity levels on the cost per unit and the total expense across different cost classifications.