Which of the following statements regarding fixed costs is incorrect

A) Fixed costs expressed on a per unit basis will react inversely with changes in activity.
B) Expressing fixed costs on a per unit basis usually is the best approach for decision-making.
C) Assumptions by accountants regarding the behaviour of fixed costs rest heavily on the concept of the relevant range.
D) Fixed costs frequently represent long-term investments in property, plant, and equipment.

Question

Lacey Munson · Accepted Answer

Final Answer : B, Explanation :  Expressing fixed costs on a per unit basis might not be the best approach for decision-making as it can lead to incorrect analysis and decisions. Fixed costs are constant irrespective of the number of units produced, so analyzing them on a per unit basis may not be relevant.

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