If the activity level increases, what happens to the unit fixed cost?
A)It decreases.
B)It increases.
C)It remains the same.
D)It depends on how much the activity level increases.

Question

Quizplus · Accepted Answer

When the activity level increases, the fixed cost is spread over a larger number of units, which reduces the per unit fixed cost, leading to a decrease in the unit fixed cost.

If the Activity Level Increases, What Happens to the Unit