What kind of total cost increases when volume increases while per unit cost decreases as volume...

What kind of total cost increases when volume increases while per unit cost decreases as volume increases.

Mixed

Fixed

Variable

Expert Solution

Answer is Mixed cost

A mixed cost has a fixed part that does not change as the volume changes and a variable part that changes at the same rate as the volume changes. Any cost that is all or part variable will change the same direction as volume changes. Since there are both elements ( fixed and variable), total cost increases when volume increases while per unit cost decreases as volume increases. It is also called semi variable costs.

For example, There is a company ABC ltd which is manufacturing the tyres. For the production of the tyres, the company has to incur the fixed cost ( ex: factory rent) that will remain the same without any effect of the number of units produced and the variable cost ( ex: raw materials) which will increase with the increase in the level of the production of the company. The total cost of the production of the tyres is the mixed cost for the company as it has both the fixed costs and variable cost components.

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ekkarill92 answered 2 years ago

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