Question 12.5 pts As the level of activity increases: fixed costs per unit decrease and total...

Question 12.5 pts

As the level of activity increases:

fixed costs per unit decrease and total variable costs decrease

total variable costs increase and fixed costs per unit remain constant

fixed costs per unit increase and total variable costs remain constant

total variable costs decrease and fixed costs per unit increase

fixed costs per unit remain constant and total variable costs remain constant

total variable costs increase and fixed costs per unit increase

none of the above are correct

Expert Solution

We know that Total Fixed Cost remains constant, while Variable cost per unit also remains constant.
Hence, as the level of activity INCREASES,

Fixed Cost per unit decreases (total fixed cost remains the same), while

Total Variable cost increases (Variable cost per unit remains the same)

Answer

1	fixed costs per unit decrease and total variable costs decrease	*INCORRECT, because Total variable cost also Increases*
2	total variable costs increase and fixed costs per unit remain constant	*INCORRECT, because Fixed cost per unit decreases*
3	fixed costs per unit increase and total variable costs remain constant	*INCORRECT because Fixed cost per unit decreases and total variable cost increases*
4	total variable costs decrease and fixed costs per unit increase	*INCORRECT because Fixed cost per unit decreases and total variable cost increases*
5	fixed costs per unit remain constant and total variable costs remain constant	*INCORRECT because Fixed cost per unit decreases and total variable cost increases*
6	total variable costs increase and fixed costs per unit increase	*INCORRECT because Fixed cost per unit decreases*
7	none of the above are correct	*CORRECT, because all the above answers are INCORRECT.*

Correct Answer = Option LAST: None of the Above are CORRECT

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