Question

In: Accounting

As the activity level increases, which of the following will decrease? A. Variable cost per unit...

As the activity level increases, which of the following will decrease?

A.

Variable cost per unit
B.

Fixed cost in total
C.

Fixed cost per unit
D.

Variable cost in total

Solutions

Expert Solution

As the activity level will increase;

Variable cost per unit will remain same

Variable cost in total will increase

Fixed cost in total will remain same

Fixed cost per unit will decrease

Activity 10000 20000
VC p.u $                  2 $                        2
Total VC $         20,000 $              40,000
Total FC $      200,000 $            200,000
FC per unit $                20 $                      10

Hence, Option C is correct.

For any clarification, please comment. Kindly Up Vote!

ekkarill92 answered 2 years ago
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