Which one of the following statements about costs is correct?
A) Total costs will decrease as the variable cost per unit increases, all else held constant.
B) A decrease in total ﬁxed costs will increase the net present value of a project, all else held constant.
C) An increase in the variable cost per unit will increase the contribution margin, all else held constant.
D) Total costs will be greater under the best-case scenario than under the base-case scenario.
E) The higher the total costs, the larger the net present value of a project.

Question

Quizplus · Accepted Answer

A decrease in total fixed costs reduces the overall expenses of a project, thereby increasing its net present value, assuming all other factors remain constant.

Which One of the Following Statements About Costs Is Correct