Which of the following statements regarding fixed costs is true?
A)When production increases, fixed cost per unit increases.
B)When production decreases, total fixed costs decrease.
C)When production increases, fixed cost per unit decreases.
D)When production decreases, total fixed costs increase.

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not change with the level of production. Therefore, when production increases, the fixed cost per unit decreases because the same total fixed costs are spread over more units.

Which of the Following Statements Regarding Fixed Costs Is True