Homework Answers
Answer
c. The fixed cost per unit decreases when volume increases.
Explanation
- Fixed cost is that cost which is always the same at all levels of production.
- It does not change with the change in output. example- Rent, Insurance, etc.
- Total Fixed cost is always the same.
- Per unit Fixed cost = Total fixed cost / units
- As units increase, per unit Fixed cost decreases because the same numerator is divided by larger denominators.
In case of any doubt, please comment.
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