Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behaviour patterns remain unchanged the?
A)total variable cost will remain unchanged.
B)total cost per unit will decrease.
C)fixed costs will increase in total.
D)variable cost per unit will increase.

Question

Quizplus · Accepted Answer

When production increases, total variable costs increase, but variable cost per unit remains the same. Fixed costs are spread over more units, reducing the total cost per unit.

Last Month, When 10,000 Units of a Product Were Manufactured